Almost a quarter of public sector outsourcing deals brought back in-house

23 March 2012

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25 March 2012 | Paul Snell

Poor contract management led just under a quarter of public sector organisations to bring outsourced contracts back in-house last year to save money and improve quality.

According to research conducted among central government departments, local authorities, the health service and the police, more than a third (38 per cent) of deals were cancelled because they did not provide the value expected.

The survey of 100 HR directors carried out by recruitment website and Step Ahead Research found a lack of skills was the prime reason for the contract failures, with 55 per cent highlighting a need to boost project management skills.

The organisations said expected efficiency savings from such deals could be threatened if more effective management was not quickly put in place.

“The debate over public sector outsourcing is far from over. However, it is clear that public service reform will mean a change in the skills that are needed amongst people involved in commissioning and delivering services,” said Step Ahead Research chief executive Mark Froud. “Good public services have always relied on having people with the right experience and attributes, but this needs to extend to the skills to manage contractors if we are to achieve the essential savings to the public purse.”

The poll also found 62 per cent of personnel chiefs believed outsourced deals were a route to cost savings, but just 26 per cent thought they delivered better quality services.

The two companies outlined four steps for improvement. These were: the establishment of a “rightsourcing advisory group” to oversee the improvement of skills; the creation of a “public service learning academy” to allow public sector bodies, suppliers and other interested parties such as unions and voluntary organisations to share ideas and best practice; the publication of outsourcing guidelines for commissioners to ensure objectives are met; and the development of a “self-assessment diagnostic toolkit” to help public workers make the move to the voluntary and community sectors if required.

Last month the Cabinet Office announced the creation of an academy for civil servants in central government to improve their capability to manage major projects.

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