Published on in Responsible Business

I noted with interest that Oxford Economics have produced a report on the UK outsourcing industry. I have to confess that while I’m relatively up-to-speed on outsourcing in my own industry, I was surprised by the sheer scale of outsourcing more widely, with the report estimating turnover across all ‘outsourced’ sectors at a massive £207bn. But then I thought about it a bit more, and given that outsourced IT makes up some £41.7bn of this (the largest single contributor incidentally), the £207bn figure started to seem less incredible.

Vast swathes of the economy in both the public and private sector, are hugely reliant on IT. That’s anything from the checkout at your local supermarket to the IT making sure the national grid directs energy where it is needed (quite literally keeping the lights on). Not all of this is outsourced of course, but suddenly you begin to realise that actually that £41.7bn is working extremely hard.

Perhaps more interesting is the finding that most of that is accounted for by the private sector (£35bn in the private sector compared to £6.7bn in the public sector) which seems to suggest that the bottom line imperative has driven the private sector to realise the benefits of IT outsourcing more than the public sector. It’s difficult without the breakdown by percentage, but that seems a reasonable conclusion.

The point is, with public spending under such pressure, the public sector needs to adopt outsourcing techniques that have proved successful in the private sector. To take an example, Tesco does not collect, process and manage all of its Clubcard data, but gets a third-party data specialist to do this (called Dunnhumby if you are interested, and which was so successful that Tesco ultimately bought it). They know how to manipulate the data in such a way as to make it useful to Tesco. Likewise, the public sector needs to understand that designing IT systems is not its forte and should pass this on to those who have the experience and expertise. When it comes to desktop shared services, not only does Fujitsu tick those boxes, but the Flex package is open to all public sector organisations as part of the cross-government approved framework.

Just as there is no business case for Tesco trying to manage the Clubcard data itself, there is no business case for public sector organisations insisting on owning and running their own IT when we can do it more efficiently and cheaper.

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