John Mackie, Public Sector Lead (UK)

Maintaining service delivery levels with reduced budgets is the order of the day – and the use of outsourcing service providers and shared service centres offers public sector organisations creative solutions to this challenge.

The UK is now a mature outsourcing market and recent EquaTerra research has shown that public sector organisations are primarily outsourcing to reduce costs (78% of respondents), increase financial flexibility (39%), improve quality (33%) and act as an agent for change (28%).  Satisfaction levels with outsourcing contracts were also shown to be encouragingly high.  In common with wider industry trends, 61% of public sector organisations stated that they are certain to, or will probably, outsource more in the foreseeable future.

Clearly outsourcing is an established and effective strategy, but success is by no means guaranteed. It’s not easy to pick your way though this decision making process, and even when you can see a way forward, there are so many potential pitfalls at each step of the process – but they can be avoided.

Four examples of some of the pitfalls that you should be aware of and ready to address are:

1.    In the preparatory sourcing strategy phase, making the wrong choice is the most significant pitfall to avoid.  While this sounds obvious, it’s important to asses all service delivery options, research the market and ensure outsourcing is the right answer given your specific circumstances.

2.    When service providers are shortlisted and selected and contracts negotiated, it’s important to ensure that the correct process is followed. It’s wise to take advice from The Office of Government Commerce (OGC) to ensure the correct process is followed and to review OJEU procurement options.

3.    At the point of implementation, it’s critical to ensure that both the client organisation and service provider dedicates the appropriate number of staff with the specific skills needed. Not doing so risks a timely and controlled transfer of responsibility – plus, relationships established now will set the tone, so working together is key.

4.    Throughout the term of the contract, it’s essential to focus on optimisation to ensure that the full benefits of the contract are realised. A common pitfall to avoid is poor outsourcing governance which can have a significant impact on the value of the contract.  Here, an effective strategy is to ensure that staff receive the necessary training and good governance procedures are in place.

A final point to remember is that it’s important not to assume that service will improve by itself and that prices will remain market competitive.  Continuous improvement plans and awareness of outsourcing market trends are essential throughout the duration of the contract.

Filed under: How to..., Outsourcing, Public Sector by EquaTerra