Outsourcing In The Public Sector: Unnecessary Fear?

Outsourcing In The Public Sector: Unnecessary Fear?

By Adam Bamford
25 April 2016

There are countless research papers, reports, and case studies of local councils and NHS organisations successfully outsourcing business functions to third parties but, high profile failures of a small number of contracts over the past decade, have instilled a fear within the public sector around outsourcing.

There are always risks associated in business, whether commercial or public sector, which can be exacerbated when outsourced. Outsourcing contracts, whether low or high value have the risk of not delivering on their promises, leading to the view that taxpayers money has been spent badly, or even wasted.

But our own experience at Selenity (formerly Software Europe) is one of guarded optimism. Like any other business working with the public sector we encounter all types of readiness or reticence to outsource, and my advice is always the same – do your due diligence first, and rely on good recommendations.

The benefits of outsourcing even one small part of your business can, in most cases, present cost savings and free up staff to focus on other areas of the business. As an example, we worked recently with Walsall Housing Group - after implementing our Expenses product, it was able to reduce the time spent managing colleague expense claims from two employees spending 20 hours per week processing claims, to one colleague spending half a day per month.

That’s just one of our own examples, but with the National Outsourcing Association’s Public Sector Day, you’ll likely hear many more success stories.

It’s fair to say that outsourcing providers are encountering a culture in the public sector whereby the view is money can be better spent elsewhere rather than on outsourcing, which is particularly true within finance teams.

But from our own experience that’s not necessarily true. By way of example, we provide an extra layer of compliance and checking which proves vital – we’ve seen line managers/finance teams/authorisers signing off expenses and when they come through to us we see pictures of petrol pumps, dogs, wrong receipts, etc. These are expenses that are being approved that shouldn’t have been.

The due diligence piece
As I mentioned above, due diligence is possibly the best place to start when considering outsourcing. I always encourage prospects to talk to at least three separate suppliers of the same service – get a feel for what is out there and what opportunities there are for your organisation.

But before you even approach the outsourcing suppliers, make sure you know what you’re looking for: how much do you want to outsource? Are you looking to free up your time? Are you looking to bring cost savings to the business? Do you have the skills in house to manage the relationship with the outsourcer effectively? Get to the root of what you want to achieve.

Once you’ve chosen the three (or more suppliers) that you think will meet your goals, speak to their customers; the benefits that commercial organisations see do cross over into the public sector so don’t be put off by commercial customers. It may seem obvious, but a supplier that readily provides customer references is far more preferable than one who can’t, or won’t.

The next step is to make sure that any contracts you look at are fair, that they provide an agreed scope of work, deliverables that they can achieve and that you’re happy with, and don’t necessarily lock you in for in inordinate amount of time (decade long contracts tend to favour the supplier rather than the customer!).

Once you’ve done your due diligence, spoken with references and agreed to terms, then all that’s left to do is put some trust in your outsourcer.

Thanks to the rapid developments in new technologies, there are many smaller and niche outsourced services that can take ownership of virtually any part of a business function delivering numerous different benefits. Forget about the failed contracts of years past, listen to your colleagues who’ve been successful in outsourcing and if you think there’s an opportunity to bring about cost savings or efficiencies then consider them. But do your due diligence!