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03.07.17

Public sector outsourcing: a marriage that must work

Source: PSE Jun/Jul 17

Kerry Hallard, the president of the Global Sourcing Association, argues that despite some highly-publicised cases of breakdowns in public sector outsourcing, the relationship has generated much success.

The public sector and the sourcing industry relationship is a bit like a celebrity marriage; it faces ongoing intense scrutiny by the outside world, with its detractors poised to jump on any modicum of news that might support the accusation that it is doomed. They are egged on by the occasional revelation from ‘inside sources’ that has typically been leaked by an agenda-driven relative, whilst behind the ‘public’ façade both sides are usually committed to the relationship and working assiduously to make it a success. 

But whether you are for or against the partnership, one thing is certain: the UK needs this particular marriage to work, and more so now than ever before. 

All around us, the world of consumerism is going through a tsunamic transformative period, with public sector services having to swim extremely hard to keep up or risk being completely overwhelmed. Our population is demanding a better consumer experience all round; they want more tailored services to be made available to them, and at a time that is convenient to them. They want to talk (or text or email) when it suits them, and they want to transact through a range of channels and platforms that can be accessed by them anytime or day. Digitalisation has hit the mainstream, and the public is voraciously consuming it in huge quantities in order to help them navigate the complexities of their own ever-demanding lifestyles. The cost of surviving and thriving in this new digital economy is at a scale, however, that many private sector enterprises are struggling to compete in, never mind their public sector cousins. 

Despite some highly-publicised cases of breakdowns in public sector outsourcing, the relationship between the public sector and the sourcing industry has generated much success. It is easy to understand that in times of austerity, every penny of public spending is scrutinised and private sector providers can be cast as profit-driven bandits, taking public funds and returning a poor service. The reality, though, is that it’s simply not true. The growing market for public sector procurement demonstrates how cost-effective, efficient and competitive organisations have helped deliver crucial services to those most in need, whilst helping the public sector manage costs. 

It’s a fact that spending on public procurement had been growing since its ‘big bang’ in the late 1980s. In 2012, the market in public sector contracts was worth £93.5bn and it has grown since, eclipsing £100bn in the past few years. That said, according to recent research, there was a marked reduction in government allocation of contracts in Q1 2017, from 49 agreed in Q1 2016 to just 22 in the same period this year. Government departments spent £304m on outsourcing in Q1 2017, compared to £1.6bn in January to March 2016. 

The reason cited was that public sector organisations are adopting a ‘wait and see’ approach in the wake of Brexit and the general election. It is no surprise, therefore, that both sides are increasingly looking to see how they can work better together to avoid the blunders of the past and unlock the value beyond what’s in the contract. 

The Global Sourcing Association has been doing its part by creating the Global Sourcing Standard with the help of major buyers of outsourced services, including organisations in the public sector. This is a world-first unifying standard of practice that both buyers and suppliers can be accredited to, in both the private and public sector. It encourages closer strategic alignment and is supported by a framework of transparency principles, competencies and capabilities and best practice. The BBC was the first public sector organisation to become accredited and has since gone on record in estimating annual cost savings of up to £42m through adopting the principles and strategies that have been outlined in the standard. Numerous other public sector (and private sector) organisations have since embarked on the same journey of discovery. 

As the public sector drives for efficiency and cost-effective solutions in the digital age, robotic process automation and artificial intelligence will play a great role in future solutions. Adoption by some councils is encouraging, and it would be worth investing some of your time to learn more about automation. We have, of course, been reminded of the dangers of operating in the digital age: the recent cyber-attack on the NHS has highlighted a vulnerability that will require further investment in sourcing from the public sector. The sourcing industry works closely with cyber security analysts and experts to provide the greatest possible defences against cyber criminals. 

We will be hosting our annual Symposium on 27-28 June in London, with a keynote from Dr David Bray, Eisenhower Fellow and CIO of the US Federal Communications Commission, discussing how cyber security is an issue for all organisations. Whilst you are there, you can also attend a half-day training session on Strategic Process Automation, and find out how you can improve on the broad scope of fundamentals of sourcing, as well as learn more about the Global Sourcing Standard. 

Admission is free to all public sector ‘buyers’ of sourcing services, but you will need to register to attend. Join us and help make the marriage between the public sector and sourcing industry a better informed, more efficient and highly-effective relationship for all.

FOR MORE INFORMATION

W: www.gsa-uk.com/gsa-symposium-2017

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