IOD Push for Public Sector Shared Services and Outsourcing
March 29, 2010 in Corporate Services, Public Services, Shared Services and Outsourcing
In a recent report, the Institute of Directors (IOD) suggests rapid moves to impove procurement, implement shared services and outsourcing services should reduce government deficits.
The IOD highlights the potential for outsourcing, to the private sector, services provided by a number of public service bodies, especially the operational agencies of government.
The IOD says the case for shared services is “self-evident” and encourages the government to accelerate widespread adoption across the public sector, suggesting that outsourcing can bring similar benefits to shared services while working faster.
Claiming £25bn could be saved by restructuring all public sector procurement and reconfiguring services, the report states the key benefits of shared services and outsourcing are delivered through -
- Savings due to aggregation,
- Standardised and improved processes,
- Reduced IT costs,
- Bringing together best practice,
- Savings from cheaper locations,
- Raising of standards to those of the highest (or better),
- Critical mass giving better expertise for all,
- Better handling of peaks and troughs – avoiding costly temporary staff,
- Higher productivity with better managers, processes and performance monitoring,
- Greater accountability from defined service levels and cost monitoring.
The report recognises the significant costs involved in delivering shared services and outsourcing solutions for suppliers and potential clients – with suppliers recouping bidding costs through higher prices.
To support an accelerated approach, it recommends the establishment of broad “framework agreements” with model specifications and indicative pricing for many services – simplifying tendering processes and reducing costs. It would also ensure the cost of basic services and ‘bells and whistles’ are transparent.
The report states these changes (especially in procurement) could be delivered in a way that works in sympathy with the “Total Place” initiative …. though few details suggestions are given.
There are good examples of successful service reconfiguration projects bringing all-round improvement, though the public sector doesn’t have an unblemished record in this respect.
Programmes which primarily focus on cost-reduction can be implemented poorly, failing to deliver the improvements in service which the report suggests are possible.
At the same time, a contrary argument is being made by other experts that poorly-designed back-office solutions have serious detrimental impacts on customer outcomes, reducing service quality, creating significant waste and increases overall cost.
How certain are you the government can deliver a programme which saves money while securing quality improvements?
Would it be better to move services into the private sector?
