UK public sector is world’s second-largest outsourcing market

22 March 2013

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22 March 2013 | Adam Leach

Large-scale outsourcing of public sector services has made the UK public sector the biggest outsourcing market outside the US.

The latest EMEA TPI analysis, published this week by Information Services Group (ISG), explained the number of commercial outsourcing contracts valued at €4 million (£3.4 million) or more awarded by government increased by 16 per cent in 2012. The value of government contracts is such that the public sector accounts for more than half - 55 per cent - of all outsourcing deals above €4 million signed across the year in the UK.

However, while the number of contracts has increased, the average annual contract value has in fact declined, indicating that public sector bodies are doing their own deals, rather than outsourcing together. The average annual contract value has declined by 12 per cent since 2010, according to the report.

Luke Mansell, director at ISG, said: “The public sector has recognised that best-of-breed providers [experts in one area] offer specialist knowledge that can derive real value from outsourced services, value that wasn’t possible with the single-provider mega-deals of the past. As a result of this trend toward multi-sourcing, service integration and management is on the rise to ensure contracts deliver value and services are delivered seamlessly.”

Services previously carried out by the public sector that have been outsourced include the Department for Work and Pensions' Work Programme, where 18 prime providers are working to get the unemployed back into work, and the decision by Barnet Council to outsource its corporate procurement, IT and HR services to Capita.

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