Outsourcing should not be a dirty word - Supply Management

Outsourcing should not be a dirty word

12 November 2012
Recent high profile news stories have thrust outsourcing into the public spotlight and under this brightness, the industry may seem pale and washed out. Despite this it has to be understood whenever private sector companies bid for public sector contracts there is always a great amount of scrutiny through formal EU governed processes. After all, it is our money being spent, and we want it spent in the best possible way.

But with the industry under fire for the Olympic security deal and in the spotlight for the rail contract situation, it’s important to look at how outsourcing key services is an essential part of any healthy organisation’s overall performance. Outsourcing isn’t the dirty word some parts of the media would currently have us believe.

During the Olympics we surveyed companies across both the public and private sectors and asked: “Do you think what happened regarding private contractors at the Olympics will change the way public contracts are proposed and awarded?” All sectors - except police and justice - said it wouldn’t make a difference. In police and justice, 35 per cent believed it would make a difference. When asked what that difference would be, all replied the contracts would now have more robust penalties for failure and the most important attribute the supplier would have to demonstrate is relevant expertise. No longer would it be assumed large businesses had the relevant skills. Clearly this simply tells us the appetite for outsourcing is still strong, but future contractual clauses may well be more stringent. This is where the debate needs to focus. Not whether awarding private business with public contracts is right or wrong – that’s a commercial imperative to address the CSR budget cuts - but the relevant merits of encouraging a specialist provider to deliver services that offer better quality and better value. To deliver this a robust process is essential, from the original tender through to final interview to ensure an effective and fair evaluation of each bid. Such a process has to be able to separate cost from value, as the highest – or lowest – price does not necessarily offer the best value for money for the services to be provided. But it is accepted in these tough economic times it that can be a very brave decision to make, regardless of the sector. Cost cutting and ensuring a business is as lean as it can be for the future is the order of the day, regardless of the industry. Used correctly, outsourcing support services can really support that effort, not least by the fact managing large teams of support staff jobs is time consuming, and therefore expensive to a business or government department. Wholesale change isn’t necessary and contrary to what is currently being said, outsourcing is not a dirty word, but a necessary component of how a business or service operates efficiently. ☛ Andy Vaughan is managing director of Resource Group GB
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