Government consultancy spend spirals out of control once again - so what now?

Sooraj Shah
clock • 7 min read

Can anything be done to help Whitehall kick its addiction to consultancy?

"To what extent are Whitehall departments now being held to account at a Whitehall level and to what extent are they now being left to their own devices," he asked.

Pavitt said that it is a "huge disappointment" that government has once again turned to organisations that "don't necessarily have the government's welfare as their best interest".

He said that there is always a role for consultants, but warned that Whitehall is leaning too heavily on them. "Unfortunately, consultants are increasingly used these days in government as substitutes for civil servants who can think clearly and make their own decisions," he said.

According to an NAO report released in January, ICT alone accounted for 11 per cent of the consultancy and temporary staff employed by Whitehall, and 25 per cent of the spend.

The NAO suggested that the government could make an annual saving of between £3.7m and £4.7m by hiring permanent staff to fill 61 full-time equivalent posts that are currently being covered by temporary developers. The same could be said for technical architects, with the government standing to make an annual saving of between £1.8m and £2.5m by filling 31 full-time equivalent posts with permanent staff, according to the NAO. 

So is the government reluctant to insource?

Wilde believes that the death of HMRC's Aspire contract, coupled with the end of other large public sector outsourcing deals, is a sign of things to come.

He, like Pavitt and Transport for London (TfL) CIO Steve Townsend, believes that a mixture of outsourcing and insourcing makes sense.

"Outsourcing everything may not work for an organisation - insourcing may not work either. I think it is a blend of getting the best use of the marketplace, depending on where your organisation is," said TfL's Townsend.

One area that many IT leaders see as particularly ripe for savings is the systems integrator (SI) layer.

"Consultancy has a role, but the SI or brokerage layer can be done by the internal subject-matter experts, the ‘doing' is done by the outsourcer, and the running is done by a mixture of insource and outsource," said Pavitt. 

"That's the model that a lot of the private sector, including Specsavers, are adopting. The government has rather stuck its head in the sand, which is somewhat surprising." 

Wilde, however, believes that the public sector has improved in terms of commercial awareness and that this has been driven by disruption from some of the mid-range providers - at the cost of the traditional systems integrators, such as Capgemini and Capita.

"I'm seeing significant behavioural change in companies like Capita around how they provide services compared to how they did five years ago. It will be interesting to see which SIs will survive over the next few years as that accelerates through," he said.

Pavitt pointed to Specsavers' recent contract with Accenture as a good example of the kind of SI deal he believes the government should be considering.

"[Accenture] aren't just looking after our heritage - our legacy engines, if you will - but they are also getting us ready to migrate away from them in the next four to five years. So they've taken out a contract with us, which will ultimately have a low revenue over quite a few years as we migrate from our heritage to our new platforms, and that's built into our pricing platforms," he said.

Pavitt said that it was an example of creative thinking about commercial deals that the public sector could learn from.

So what else can be done to ensure government spending on consultancy doesn't continue to balloon? 

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