Coalition expected to outsource and offshore to cut deficit

By Dawinderpal Sahota
14 May 2010 View Comments
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David Cameron
The Cameron-Clegg-led government will outsource to cut costs

The new coalition government will outsource an extensive amount of IT functions to businesses in the UK and abroad, claims the National Outsourcing Association (NOA).

The NOA carried out research by monitoring more than 1,600 “unique communications” – views on outsourcing from UK blogs, social media, online and print articles – to compile its quarterly Outsourcing Reputation Index.

The research showed that a substantial 70 per cent of all commentary on outsourcing abroad, or offshoring, was centred on the public sector and nearly half (43 per cent) of all commentary on outsourcing domestically was focused on the same area.

The NOA said that its research offers a clear indication that the UK is expecting a significant uptake in public sector outsourcing and offshoring to cut the public sector deficit.

The body claims that the clear reason that outsourcing and offshoring in the public sector will increase is due to the perceived cost savings, with more than half (55 per cent) of the unique communications citing cost savings as the key driver. Improvement in customer service was the second most-cited benefit (17 per cent).

The major concerns relating to outsourcing were quality of service (39 per cent) and job losses (29 per cent).

Kerry Hallard, communications director at the NOA, explained that concerns about quality of service were undue, asserting that outsourcing is all about having better processes in place and bringing experts into each area.

“Concerns over quality are just that: concerns, rather than findings,” she said. “Until people have done it, they don’t realise that outsourcing should actually improve the quality of service.”

She added that outsourcing decisions need to be made on a case-by-case basis and that an increase in domestic outsourcing will not mean fewer jobs for IT staff in the UK.

“Cost savings may be a benefit, but a company shouldn’t be outsourcing if it’s not doing it for the right reasons. Outsourcing is all about producing improved deliverables from IT resources.”

She added: “A rise in outsourcing won’t affect the overall job market in the UK, it will just mean that a lot of the jobs will be moved from in-house to suppliers.”

Outsourcing advice for the coalition government

The NOA has compiled a guide to successful outsourcing, with Martin Hart, NOA’s chairman, explaining: “Done correctly, outsourcing delivers great efficiencies – precisely what David Cameron has been advocating these past few weeks in the run-up to the election. We urge them to follow outsourcing best practice”.

The NOA’s steps to successful outsourcing include:

Change the approach. Thoroughly assess the situation and end objectives. Outsourcing must be seen as central to success, not a barrier.

Safely manage out. Evaluate what to keep in-house and what to outsource. This allows public departments to remain focused on delivering core services.

Communicate. Convey outsourcing plans to all stakeholders, internal and external, including unions, to overcome opposition

Get into the community early. Talk to outsourcing suppliers before you procure services and before a ‘vision’ is put together.

Create shared incentives for partners. The government needs to understand that profit is important for outsourcing suppliers too. The NOA advocates the use of gain share models to ensure that organisations and suppliers are working towards a common goal.

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