UK public sector to embrace outsourcing in 2010

The UK National Outsourcing Association published its 2010 predictions survey, stating that the public sector will "need to explore more shared services and outsourcing options after the general election than some currently believe".

Rather than being driven by operational benefits, the driver will be "inevitable budget cuts", as the government looks to deal with "colossal spending deficits created by the UK government's banking bailout". This will lead to the use of outsourcing to maintain and improve service service levels against a backdrop of tough budgetary constraints.

According to a recent report, the UK's National Health Service alone will have spent £6bn on its National Programme for IT during the current financial year (which ends in April 2010), and this figure only covers centralised health department spend - local IT initiatives are on top of this. Obviously public sector IT is big business, meaning a change of wholesale change of strategy is significant both for those involve directly and indirect partners (including potential outsourcing partners), and the private sector is also likely to be looking to see how such a transition is managed - as has previously been discussed, problems with public sector projects rarely remain secret.

The NOA said that the public sector has had an "early warning"of what is to come, and that it should use the time between now and the election to position itself to take advantage of outsourcing. This may mean it is necessary for some reorganisation, so that what can be outsourced can be more easily packaged.

On a related note, the UK's Society of IT Managers, a public-sector ICT group, told Computer Weekly that local government IT departments will feel pressure in two respects: they will be expected to demonstrate that their IT costs are as low as can be, and that IT is being used effectively to cut costs in other departments. This means that IT departments will need to exhibit "maturity of leadership" in order to be demonstrably meeting the two criteria.

Other outsourcing predictions
Returning to the NOA survey, there are some positives in the pipeline for 2010. Perhaps most significantly, the UK will be out of recession during the year, leading to a boost in confidence. This is likely to mean that many will be turning to their outsourcing supplier for increased capacity to support renewed growth - although there is still likely to be a significant amount of caution evident.

It was also suggested that 2010 will see the revision of multisourcing and multivendor deals, as companies attempt to create simplicity in their outsourcing. Focusing on a smaller pool of suppliers will also help reduce governance costs, a common problem in multi-vendor environments.

The NOA also said that "environmental concerns will come back to bite those who thought they had been forgotten in recession". Some parts of the carbon reduction commitment will become law, and suppliers will need to understand and be aware of of the supply chain implications.

Other predictions include a wider adoption of cloud-based technologies, although "given that outsourcing arrangements are based on relationship and change more than technology", this "just becomes (in outsourcing terms) another way of deploying the technology". SMEs will also recognise the benefits of outsourcing, as they look to exploit growth opportunities while reducing overheads.
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