Government outsourcing records significant increase

Outsourcing specialists, arvato, have recently released their UK Quarterly Outsourcing Index detailing the state of the outsourcing market within the country – so we naturally took a look and have gathered some of the most important findings together.

It seems that within the last five years, government outsourcing has grown significantly – specifically an increase in shared services has helped to expand the outsourcing umbrella. In fact, shared services accounted for £1.2 billion in central government outsourcing, showing that the public sector is calling out for further investment in outsourcing and shared services.

Just to clarify: shared services relate to agreements under which a number of different departments or agencies group back office functions to a single, outsourced provider. And in the five years prior to the appointment of the coalition government, only £58 million was spent on outsourcing shared services.

Debra Maxwell, the CEO for arvato UK, noted how central government departments have “moved quickly” in recent years to take advantage of the “billions of pounds in savings” that can be made from a “shared services agenda.”
Whilst shared services are not necessarily a new phenomenon within government, the use of private sector outsourcing partnerships are – but it is becoming obvious that such partnerships can “bring in the necessary expertise for real, large scale transformation.”
And this need for transformation looks set to continue, meaning the number of outsourcing contracts signed off by government departments will also continue to grow.

The deal value for outsourced shared services has increased to £97.9 million since 2010; in the five years prior to this, only £53 million was spent. But with this increase in spending has come an increase in the benefits received – in fact, there has been a 27% rise in the value of revenues and benefits from contracts outsourced by local authorities since 2010.

It seems that the Spending Review and increased pressure to provide value for money is forcing the government to look at outsourcing in a whole new light – and begin to appreciate the value it can deliver.

Do you think the use of outsourcing in both national and local government departments will continue to grow in the future?