Government spending cuts: can outsourcing save public sector IT jobs?


Government spending cuts: can outsourcing save public sector IT jobs?

This week, the public sector heard the news it has been anxiously waiting for - where the £6bn spending cuts will fall, and who will be affected the most.

IT is one area where cuts, as expected, were ruthless, with a £95m axe taken to IT spending, leaving many government IT departments wondering what the future holds.

As the cuts take effect, public sector IT personnel will fear losing their jobs, as it becomes more apparent that IT departments will have to seriously streamline their structure, and become more efficient on a much tighter budget.

It is clear one trend we will see is a large increase in outsourcing by government bodies as they can no longer afford to manage IT in-house. As Seymour Pierce analyst Caroline de La Soujeole explained this week, approximately £80bn of public sector services are currently outsourced but she predicts this could exceed £140bn by 2015.

It seems inevitable that internal IT staff are likely to be the main victims of the spending cuts as the government turns to the private sector to get a better return on investment for less, in what de La Soujeole calls the anticipated "golden age of outsourcing".

Although this presents a massive opportunity to SME suppliers, who will provide the outsourced IT management, it does not necessarily mean job losses for public sector workers. There is a way in which outsourcing IT can avoid redundancies.

Essentially, this involves taking a slightly different approach to outsourcing, that provides a more comprehensive outsourcing package to businesses and organisations who can no longer manage their IT. This model allows businesses to outsource IT management, maintenance and the day to day running of their technology but, crucially, also includes internal employees within this too.

As well as the physical IT, in house staff become employed by the outsourcing company, and continue their job as normal. This means the chosen SME outsource partner will be accountable for an organisation's entire IT system, including its employees.

Such a model is becoming increasingly relevant to IT departments across the public sector, as it means job losses can be avoided.

It is imperative that, right now, all public sector bodies prioritise this, focusing on implementing the appropriate strategies to deal with the looming cuts and ensure organisations' most important asset - its staff - is protected as much as possible.

Neil Stephenson is CEO at Onyx Group

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This was first published in May 2010


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