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Outlook 'uncertain' for public sector outsourcing

14 April 2010

Experts have warned that a post-election upsurge in outsourcing contracts is not a foregone conclusion, despite growing optimism within the industry.

With budget cuts set to place government departments under increasing pressure to find savings, many firms expect the volume of contracts outsourced by the public sector to grow after the general election on May 6th, the Financial Times reports.

However, some experts believe the picture is not as straightforward, with Royal Bank of Scotland analyst Mark Howson claiming the outlook for the outsourcing industry is "a real mixed bag" following a decade of growth.

John Tizard, director of the Centre for Public Service Partnerships, told the newspaper that government departments may seek alternative methods of cutting costs.

"The public sector will probably look to share services across the public sector before it seeks to outsource them," he said.

Despite these concerns, confidence remains that organisations which can help to reduce operating costs are well-placed to benefit from the public sector budget squeeze.

Plans set out by the Conservatives in their election manifesto yesterday (April 13th) include a pledge to improve government procurement practices by bringing in experts from the private sector.

Peter Buffoni of OdgersInterim added, "The depth of the financial crisis and scale of the deficit has caused a huge degree of polarisation amongst many public sector leaders. With understandable concern from some about how 'more for less' can realistically be achieved (especially in efficient and well run organisations) what we have seen at OdgersInterim is an increase in the number of leaders viewing the situation as a huge opportunity for a radical rethink.  Whether these are changes in how an organisation's internal customers are supported or how (and even why) some services are delivered directly to the public, there is increased demand for experienced transformation specialists to help plan for radical root and branch reform. 

Many of these plans will include outsourcing and represent only one of a range of possible options open to an organisation after the election (and critically perhaps, the post-election Budget). These reviews do ensure that the widest possible range of blue sky thinking has been undertaken before a course of action is eventually selected.  Despite uncertainty around these options and the post-election political landscape, one thing that is already very clear is that the scale of the deficit means that the relatively modest savings achieved from developing a more efficient version of business as usual will be unlikely to generate savings of the magnitude needed."

Odgers Interim are UK leaders in Interim Management solutions for the Public Sector. We have offices in London, Birmingham, Leeds, Manchester, Glasgow, Aberdeen and Cardiff as well as over 50 offices globally. We are the only Interim Management providers who are part of a top tier international executive search firm. We work closely with our executive search colleagues to find candidates who can offer short term solutions with long term benefits. www.odgersinterim.com


Categories: Public Sector

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