Government ambitions to reduce the cost of information technology will push the market for shared services projects from £23.7bn a year now, to £38.1bn by 2012, according to a report from Datamonitor.
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The market analyst said governments in the US and UK want to create economies of scale that optimise spending on IT and meet increasing demands from voters, plus an ageing population.
Prime targets for "internal outsourcing" are back office functions such as personnel and accounting, said Kate McCurdy, a Datamonitor analyst. By consolidating these services into one organisation to serve many agencies, governments will reduce the cost of maintaining multiple systems, ensure consistency of service to internal stakeholders, and disseminate best practices while allowing individual units to concentrate on their core responsibilities, she said.
McCurdy said shared services will evolve to cover high value functions such as citizen contact, tax collection, and benefits payments. However the political risk associated with these services meant share services suppliers would have to prove themselves first by providing successful administration services.
McCurdy added that provision of shared services ranged from a unitary structure where a single government organisation centralised a business service on behalf of several government departments or agencies, to a privately-run firm that supplied managed services to one or more government bodies.