Could outsourcing be the way forward for hard-pressed public sector bodies?

February 4th, 2013 Category: Office Cleaning

Many public sector organisations are under considerable financial pressure at the moment, with the government's austerity agenda leading to widespread spending cuts across the board.

Of course, state-run bodies have been expected to absorb these budget reductions without any drop in the quality of the services they provide.

This, on the face of it, might seem impossible, but many organisations have responded to this situation imaginatively.

Some have taken an overview of their finances to see how their money is being spent, so they can determine where funds are being wasted and where savings could be made.

Others have opened themselves up to public scrutiny, as they are less likely to be profligate with their money if taxpayers can see what is being done with each penny.

But outsourcing services to third party providers has also proved a popular option and one that is starting to be adopted more and more widely.

According to new figures from investment bank and stockbroker Seymour Pierce, published in the Financial Times, the overall value of outsourcing contracts in the public sector stood at £20.4 billion last year.

This is twice as high as the amount recorded in 2008 and is set to increase even further in the next few years. Indeed, Seymour Pierce believes the figure will rise to £101 billion by 2014-15.

Public sector bodies have often dealt with issues such as office cleaning, IT and payroll management in-house, but the public spending squeeze means this is becoming increasingly difficult for them to fund.

Contracting out these tasks to external organisations in the private sector has therefore provided a highly cost-effective solution, so they can put the money they have towards delivering their core services, without having to make compromises elsewhere.

This could potentially lead to long-term changes in how public sector organisations operate. After all, it is likely that state-run bodies will continue to see outsourcing and achieving greater financial efficiency as the way forward, even after the UK's budget deficit crisis has been resolved.