Government outsourcing of IT services has brought mixed but generally positive results, according to a new report from thinktank the Institute for Government.
The finding is part of a look at the broader landscape in Government outsourcing: What has worked and what needs reform? that says it has worked best for simpler services such as waste collection, cleaning, catering and maintenance services.
But the benefits have often been overstated, with no evidence to support claims of 20-30% savings, and there have been high profile project failures.
The report includes IT with HR in the back office services category and gives them a ‘green/amber’ rating, indicating a positive view with reservations.
Among the findings from its interviews with government officials was a view that IT companies often take a higher profit margin from public sector outsourcing than when dealing with the private sector. Also, the impact of outsourcing on the quality of services is often unclear because it is difficult to make precise comparisons.
Some large programmes, such as HM Revenue and Customs’ Aspire, proved to be far more expensive than originally forecast, and others, notably the NHS National IT Programme, did not deliver core elements.
Commenting on the overall outlook, the IfG says: “Consecutive governments have outsourced services with no market of good suppliers or in pursuit of unrealistic cost savings – and without a reasonable expectation that companies could deliver efficiencies or improve the quality of services.”
The report says that government must strengthen its commercial skills and capabilities, makes ministers and officials more accountable to the public and improve the evidence base that informs outsourcing decisions.
Its list of recommendations includes making full use of the Outsourcing Playbook from the Government Commercial Function; all public bodies, including local authorities, should ensure that they have up-to-date ‘commercial blueprints’ identifying where they lack skills and experience; parliamentary committees should ensure that they scrutinise plans for significant outsourcing projects before they begin; and the Cabinet Office should mandate clear standards for the collection of data on the performance of outsourced contracts in line with the Open Contracting Data Standard.
The playbook was published earlier this year as part of the Government's efforts to improve procurement. Its features include the need for publication of commercial pipelines, market health and capability assessments and project validation reviews.
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