Outsourcing IT can cost more than keeping it in house, according to local authority IT managers association Socitm, which has warned councils about the dangers of outsourcing as they struggle to cope with budget cuts.
Local authorities "face many risks in outsourcing ICT, and those that follow this route without a full appreciation of them may pay a heavy price, both financially and in terms of loss of ability to respond to change", said Socitm.
Socitm has published its views on outsourcing in the "Costs of outsourcing – uncovering the real risks" briefing paper.
The briefing says there are good reasons for outsourcing, especially for smaller organisations that may lack economies of scale and the capacity to keep abreast of developments in IT.
However, it says outsourcing a major component of the ICT service, or even the whole service, is a major commitment and "fraught with risk". The paper also says that Socitm’s own benchmarking shows that when comparing the costs for any service over a ten year period, "most elements will be more expensive if outsourced".
Socitm says the risks begin at the tender stage, when suppliers will benefit from being experts at the process of negotiating contract terms, in contrast with the local authority that will go to market only rarely for a major outsourcing.
Another pitfall of outsourcing is that many organisations choose to outsource their ICT to solve a problem. But this does not mean councils "will be any better" at managing any outsourcing contract covering a problem, said Socitm.
Another associated issue is a loss of in-house expertise, leaving the organisation unable to check or even challenge the view of the supplier.
"Outsourcing should not be considered an inevitable response to austerity", said Martin Greenwood, the briefing's author. Greenwood said organisations of all sizes should consider collaboration and sharing with other local public services as a "genuine alternative" to outsourcing.
Hampshire County Council is working with supplier UNIT4 to offer a shared services business platform to other local authorities.
Hampshire said (https://www.computerworlduk.com/news/public-sector/3263007/hampshire-sets-up-shared-services-platform/) the back office shared services programme will be offered to councils across the UK "in a bid to help them reduce costs and reform service delivery".