Richard Holway
Government and outsourcing
Alistair Cox, the CEO of Xansa, has written a letter to the Prime Minister concerning the money which HM Government is wasting by not outsourcing more of its straightforward back office operations - like HR and finance. Whereas the private sector has embraced outsourcing, and is now embracing “offshoring” too, the UK government has outsourced “precious little” - maybe as little as £1bn of the government £40bn spend on back office work is currently outsourced. Cox believes that savings of at least 20% could be guaranteed.Comment: If only it were that simple.Many might share Cox's frustration not only at the pace at which the UK government - one of the most outsourcing-friendly in Europe - is embracing outsourcing of back office functions. Even more frustrating to some is the “forked tongue” statements from some UK ministers on globalisation. How many times have I heard about the need for the private sector in the UK to embrace globalisation and indeed how the UK is the very model of a global economy. But what those same ministers advocate for the private sector is suddenly taboo if applied to the public sector and in particular their own sacred departments. Power is headcount, after all!There is little doubt that one of the main reasons for the UK's buoyant economy is its flexible employment regime and, therefore, its ability to use labour on a global basis. This buoyancy has allowed the current UK government to get away with raising taxes and spend an increased proportion of GDP on the public sector. software and IT services alone, public sector spend has increased from under 20% of the market in 1997 to around 30% today. However, whatever your political persuasion, most would agree that it is NOT just what you spend on public services that matters - it's the value you get. There is no doubt that if European governments really did embrace outsourcing - and global sourcing in particular - they could deliver better public services at a lower price. I've heard said that 2 pence off the basic rate of income tax could be achieved by these means in the next session of parliament alone with no adverse effect on service levels.However, the political cost would be huge. Flexible working, as is now common in the private sector, is still a long way off in the pubic sector. These changes would be not dissimilar to the structural changes made by Thatcher government in the 1980s and the carnage might be similar too. It has been said in the past that the UK IT industry is sleep-walking its way to oblivion with its attitude towards global sourcing. It is not just IT. The same might be applied to a wide sweep of “middle ranking - middle class - back office” jobs in the UK - all at risk of being outsourced (and lost to the UK) in the new global economy.Where we do agree with Cox is that it is about time we had serious debate on the issue, in which governments really did face up to the major issues that outsourcing and globalisation presents.
