IT outsourcing

UK public sector outsourcing is a global giant

Karl Flinders

The UK accounts for 84% of total public sector outsourcing in Europe, the Middle East and Africa (EMEA) and is the single biggest market outside the US, according to Information Services Group (ISG).

Taking into account only contracts worth more than €4m, UK public sector outsourcing spending was €4.4bn last year, compared with €900m for the rest of the EMEA region. 

The figures also reveal that the UK public sector spends more on outsourcing than the private sector, accounting for 55% of total UK outsourcing, with the private sector in the UK spending €3.7bn last year.

Public sector spending in 2012 was 16% higher than in 2011. Public sector organisations in the UK awarded 148 contracts in 2012, which was 47% higher than 2010. 

The value of contracts declined 12% in 2012, however, indicating a significant long-term rise in the use of multi-sourcing in the public sector, according to ISG.

“The public sector has recognised that best-of-breed providers offer specialist knowledge that can derive real value from outsourced services – value that was not possible with the single-provider megadeals of the past,” said Luke Mansell, director at ISG. 

“As a result of this trend towards multi-sourcing, service integration and management (SIAM) is on the rise to ensure contracts deliver value and services are delivered seamlessly,” he added.

Mansell said the UK is the only European country using outsourcing as an austerity tool.

“Despite intense downward pressures on public expenditure in most European countries, it appears that, so far, only the UK is using outsourcing as a key response to austerity measures,” he said. 

“With these programmes continuing to be implemented across EMEA, the evaluation of innovative sourcing methods to achieve cost optimisation and reduce waste is likely to increase," he added.


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