Research from Kable on public sector outsourcing shows
more is spent on IT outsourcing than business
processes.
The research has highlighted a massive increase in public sector
outsourcing, with IT contracts
driving the increase in value.
Kable’s report, Public Sector Outsourcing – 2000-06, reveals
that by 2005-06, the total value of all UK public sector IT and
business outsourcing will probably reach £46.5bn. This represents a
growth of 228% in the market since 2000-01.
IT’s proportion of the total spend on outsourcing share of the
outsourcing spend has increased also has increased
significantly.
In 2003-04, IT accounted for 56% of the total market, followed
by communications outsourcing and business process outsourcing,
each of which account for 19%. But managed services has the lowest
proportion of spending, accounting for a total of just over
£2bn.
Karen Swinden, Kable’s head of forecasting, said, “There seems
to be a general consensus that business process outsourcing is
fuelling the outsourcing market, but Kable’s analysis of public
sector contracts clearly demonstrates that IT is playing the
leading role. This is forecast to continue for the next few
years.”
Harrow council has provided a recent example of this trend. On
17 June the borough tendered for a strategic partner to help it to
enhance its IT services in a 10-year deal worth £100m.
The council said it regarded a strategic partner as an
“essential element” in the delivery of its IT strategy. It plans to
develop an ERP environment, implement a CRM system and introduce
standardised management information systems.
And in February, Birmingham council embarked on the largest
local authority IT outsourcing programme in the UK, with a scheme
worth more than £500m to cover business transformation, the running
of a contact centre and other IT services.
Kable’s research shows that the biggest rise in outsourcing has
been in the health service, where the value of outsourcing
contracts rose by almost 600% from £1bn in 2002-03 to just under
£6.9bn by the end of 2003-04, mainly as a result of the NHS
National Programme for IT.
This article was part of Computer Weekly's managed services
business channel, sponsored by Computacenter.