Surge in public sector outsourcing remains likely

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Number 10 has a new face, a new government for Anglo-prosperity, and it's going to get things done! It’s exciting times for the UK’s workforce, or is it?

In my last blog, I drew attention to the post-recession financial black hole and the widely touted prospects of the UK’s public sector potentially saving £25 billion, achievable apparently, largely, through outsourcing. If we allowed ourselves to believe everything we heard, is this really possible without being detrimental to the UK workforce?

Results from our recently published Q1 Outsourcing Reputation Index revealed that the UK is expecting a significant uptake in public sector outsourcing and offshoring in order to cut the public sector deficit. The research points the finger at an increasing number of UK public sector organisations, which have actually become less conservative in their actions by outsourcing; most notably when it comes to both increasing productivity and reducing bottom line deficit.

Already, we are seeing signs that this is indeed the direction we’re heading. Immediately after the election, outsourcing firm Capita Group became the biggest mover and shaker in Wednesday’s FTSE 100 rankings, rising 4.3 per cent. The company has clearly benefited from the fiscal uncertainty and ratification of the new coalition Government.

Our Reputation Index analysed over 1,600 unique external communications centred on outsourcing, revealing that 43 per cent of all commentary on outsourcing was focused on the public sector. Even more significantly, nearly three quarters (70%) of all commentary on offshoring related to the public sector.

For many, still reeling from redundancies, the prospect of offshoring is an unsettling one. Our Reputation Index cited nearly 43 per cent of commentary on offshoring pertained to concerns over job losses and security. According to our definitive studies conducted during the mid-2000s (another period of outsourcing concern), the actual effects of service offshoring on UK employment levels have been negligible and, in fact, those studies suggested that for every £1.00 that the UK invests in offshoring, £1.13 or so returns to the UK economy.

Those were relatively good years compared to the current climate. Maybe now there isn't the capacity to generate new jobs? But if we don't generate wealth and cut debt we will never recover, so is this a catch 22 situation?

As a new Liberal Democrat-Conservative coalition Government prepares for urgent action to curb the national debt, I would urge it to tread carefully. The Government needs to fully understand the processes and ramifications of outsourcing to optimise its benefits and reap the rewards that it can bring.

Outsourcing is just one part of the ‘holy trinity’. Organisations have the option to keep a function in-house or share the service with others. The most important question for any public sector organisation and its workforce to consider is which option to choose.

It is for this reason that the NOA supports a Public Sector Transformation special interest group. Not only must a public sector organisation consider the ‘trinity’, but it must also think about the possibility of re-organising itself to get the best value.

The group is looking to establish best practice guidelines to support the public sector in moving forward in a beneficial and equitable manner. It’s vital that outsourcing does not produce illusory short term gains and risk making the long term worse.

Whether you’re working in either the public or private sector, if you’re looking for outsourcing information and advice, the NOA can help. Visit us at www.noa.co.uk

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