18 June 2010 | Andy Allen
UK public sector organisations are paying 40 per cent over the odds for outsourced IT services, according to a report.
Compass Management Consulting has analysed central government contracts over the past five years and found the public sector could save up to £6 billion on its annual IT spend of around £14 billion without affecting front-line services.
Consultants compared prices paid by government departments in 15 public sector outsourcing deals over five years with 30 private sector contracts of around the same size to obtain benchmark figures.
Gary Bettis, UK president at Compass, said that while major transformational projects had been criticised, “there is also significant scope for savings of 40 per cent or more in day-to-day IT service delivery”.
Bettis described Chancellor George Osborne’s call for £95 million to be cut from public sector IT purchases as a good start but he hoped the government would later identify greater savings.
He believes that previous IT outsource deals set savings targets too low, at between five and 15 per cent, when 35 per cent would be an attainable target.
Blaming poor performance on questionable procurement practices and demand for extra services and customisation, which drive up costs, Bettis said: “Government departments are still far too timid in their thinking.”
He called for public sector bodies to leverage their spend and achieve economies of scale.
Bettis added: “Perhaps, more seriously, there is a very limited pool of people (in the public sector) who are capable of leading the initiative who have the skills, processes and tools to make the transformations happen.”