Public and private sector outsourcing to increase in 2010, says report

The public sector will outsource to mitigate reduced budgets, while the private sector will do so to increase growth opportunities

Both the public and private sector will increase their IT outsourcing

This year will see an increase in public sector outsourcing because of shrinking budgets, while the private sector will grow and demand more capacity from outsource suppliers, according to a survey conducted by the National Outsourcing Association (NOA).

Mark Kobayashi-Hillary, NOA offshoring director, said: “The public sector will need to look at more outsourcing options after the general election than some currently believe. Efficiencies mooted in its Operational Efficiency Programme are not enough to cover the amount of government borrowing taking place.”

Regarding the private sector, Martyn Hart, chairman of the NOA, said: "There is increasing optimism, and with growth back in the economy companies will look to outsourcing for growth opportunities and to re-skill with minimal risk.”

• Other predictions from the survey include a rise in mini-multisourcing, as end users try to reduce the number of their multi-sourcing or multi-vendor deals in an attempt to simplify them. This will reduce governance costs.

• Businesses will be forced to face environmental concerns as some parts of the Carbon Reduction Commitment (CRC) become law, and suppliers will need to familiarise themselves with this.

• With growth in the UK economy predicted for 2010, many companies will be asking outsourcers for more capacity.

• Although business process outsourcing only makes up three per cent of the market, companies that want to avoid risk but remain flexible may opt for this rather than taking on full-time staff. The NAO expects an increase in the market to five per cent by the end of the year.

• More traditionally outsourced services such as CRM or storage will start to be managed and delivered via the cloud – but the report argues that in time it is likely to be seen as just another way of deploying the technology, like thin client.

• There will be a growth in call centres in new areas such as the Phillipines, Brazil and Russia. There will also be competition from Chile. 2010 will see suppliers begin to specialise as the supply of general services increases.

• SMEs will be more interested in outsourcing. Locations offering this service to smaller businesses include Mauritius and Sri Lanka.