UK public sector fuels rise in outsourcing deals

17 November 2015

Outsourcing spend in the UK more than trebled between July and September compared to the previous three months, latest figures from the arvato UK Quarterly Outsourcing Index show.

Of the £2.2 billion worth of deals signed in quarter three, the public sector accounted for £2 billion – making it the largest public sector spend since the first quarter of 2012.

The steep rise in average contract value - up 269 per cent compared to the second quarter of 2015 - was attributed to private and government organisations awaiting the general election results before signing large deals.

Longer-term agreements were signed in quarter three with average contract lengths rising 38 per cent compared to the second quarter, the index, compiled by outsourcing research firm NelsonHall, found.

The figures also revealed significant year-on-year growth in total UK outsourcing spend, with the value of contracts signed in quarter three rising 69 per cent on the same period last year.

The majority of the spend came from central government, with departments agreeing seven contracts worth a total of £1.73 billion for a mixture of multi-scope IT infrastructure deals and shared service agreements for back office services, such as HR, payroll and finance.

In local government the total value of agreements signed by authorities increased by 67 per cent year-on-year.

The findings also highlighted a 200 per cent rise in average contract values and 70 per cent growth in deal lengths compared with the third quarter of last year.

“The government has been particularly vocal about the need for greater efficiency savings, and with much of the low-hanging fruit already picked, it’s clear the private sector will have a big role to play in delivering the bolder, braver changes needed across central and local government,” Debra Maxwell, CEO of CRM and public sector, arvato UK & Ireland.

“With even greater cuts to funding expected in this month’s spending review, the growth seen across local government will only continue. Councils are increasingly looking to change how they operate and deliver services to leverage significant savings.”

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