Stop the Indian interlopers?

‘They took our jobs!’ cry the detractors. Thousands of UK jobs are simply disappearing as big “Indian” (insert outsourcing location as applicable) outsourcers continue do our work at lower cost. They even start work five and a half hours before us – how can we possibly compete?

It seems the battle lines are being drawn again as we stare into another encroaching protectionist maelstrom. Just this week we have seen silicon.com release its annual offshoring survey, finding that ‘47.5 per cent of respondents said their organisation has “probably” offshored IT jobs’ and 32 per cent believe, or are convinced, that offshoring “could” see them lose their jobs.

Meanwhile the Equitable Life and Thames Water are receiving a pummelling in the media for outsourcing deals to HCL and an unnamed Indian provider respectively. To top the week off, the Association of Professional Staffing Companies (APSCO), a recruitment association, has hit out at Indian providers, for using UK intra-company transfer rules to bring thousands of Indian IT staff to the country which they say ‘damaging” the job prospects of British workers’. So now India is not only taking our jobs offshore but onshore too?!

In response the UK Government has implemented a largely symbolic change to the Tier 2 (Intra company transfer) rules, meaning that Indian IT workers will need to demonstrate 12 months IT experience rather than the current six. My cynical side expects this is simply a move to placate dissent around this issue as most IT workers being brought to the UK will usually have much more than a year’s experience anyway.

But don’t worry, the NOA hasn’t been offered a Daily Mail column or anything like that. We just believe it is important to meet these criticisms head-on, and the best way to do so is inject a little common sense into the argument with the following points:

• The fact is that all staff brought to the UK under a working visa will also need to be paid a UK wage. This means the argument isn’t about cost as APSCO states, but skills. Why would a UK company bring a worker in from India if an equivalently-skilled Brit is also available? In this case, the debate should be about whether the UK has an IT skills gap that these companies are trying to fill, and if so, what are we doing to fix it?

• Indian companies and those using Indian staff are cutting their overheads, streamlining processes and augmenting the customer’s capabilities to ‘do business’ and grow. This means businesses are growing in the UK, creating more high level positions and ultimately paying more tax into the UK purse.

• It is important to keep in mind that the numbers of Indian workers being brought to the UK compared to indigenous IT staff are still small. The government also does not oppose these kind of transfers: immigration minister Phil Woolas defended the practice in a recent FT article, saying: “Intra-company transfers are an important part of making the UK an attractive place in which to do business, and therefore keep industry and the economy moving.”

• It has also been detailed in various studies, most recently from Nottingham University, that offshoring jobs does bring overall benefits to the UK economy. Their Globalisation and Economic Policy centre (GEP) found that the ‘efficiencies it [offshoring] has brought has actually boosted business and led British businesses to  employ more people in the UK, not less.’

• To top this off, Indian outsourcing giant, FirstSource, has created over 1,500 call centre jobs in the UK since 2006. Plus Indian investment in the UK, and consequently in the UK economy, is only likely to increase going forward creating further examples like this.

And that’s the most important part, the offshoring of certain jobs to lower cost or better-resourced locations, makes business sense in some companies and overall UK economic sense. Of course, it is painful on a case-by-case basis, but this is usually a symptom of outsourcing mismanagement by those engaging in such contracts.

Those looking at sending work offshore should first make a clear business case. They should then work to understand the impacts on their staff, whether they will need to make redundancies, and take responsibility for what happens to staff after outsourcing. Can they be re-deployed, aided in developing their skills going forward and so on?  Communication throughout the process is vital so employees are respected and have as much time possible to take their own decisions.

By all accounts, outsourcing and offshoring is set for a big boost in 2010 and beyond as UK companies look to rebuild after the recession. This will be a good thing for UK business and will continue to create new employment and business opportunities. The opportunities may look different from before, but this is simply the evolution of industry. The UK must ride with this evolution rather than get bogged down in the protectionist offshore-bashing once more.

Outsourcing Europe

The NOA attended the launch of the EOA’s Spanish chapter this week, EOA Espaňa.  Hosted in Madrid by Repsol, the Spanish oil company, the meeting marks a new chapter in the story of outsourcing Europe and globalisation as a whole. The NOA is proud to be a part of this ongoing narrative, having been around for over 22 years now. The reason why this is such an exciting occasion is that the launch is part of something bigger – a signal of the coming together of the EOA’s separate chapters, that have been operating in relative isolation until now. The launch is a signal of much greater future collaboration between countries as the practice of outsourcing, nearshoring and offshoring takes hold in Europe.

The most interesting thing in bringing these countries together is finding out more about the differing approaches to outsourcing and the relative maturity of their individual markets.  The fact is that Spain, and France – the EOA Vice-President was in attendance at the meeting – still have relatively less mature outsourcing markets than the UK. Indeed, many are reluctant to encourage the relatively open, collaboration-rich environment the NOA tries to create in the UK for example through best practice awards and the promotion of new outsourcing ideas. The reason for this appears to be a lack of past experience of outsourcing and worry about invoking the ire of the media and the public in general. There is also less knowledge of best practice and a general lack of experience in the process of outsourcing. The efficiencies demanded by the recession mean that Spain, France and other European countries will need to get up to speed with outsourcing practice. And, while there are some notable pioneers succeeding within and outside Spain, it’s clear the timing is just right for EOA Spain, and the EOA in general, to really take off.

And this is an interesting perspective for a Brit There is a tendency in the UK to imagine we have it rough when it comes to outsourcing. The truth is however, that the maturity of UK outsourcing and offshoring is something we shouldn’t take for granted. The enlightened, who operate on the front-line of business, understand the merits of outsourcing on both a micro and macro-economic level. And, while the media maintains its vendetta against all things outsourcing, we are definitely a lot further down the ‘line of acceptance’ with the concept of globalisation than mainland Europe. Outsourcing, when done well, is accepted (in fact usually not noticed), and so is offshoring, again when implemented with a deft touch. Though, when it goes wrong, failure is rightly shown up for what it is in a very public way. We are clearly very lucky for our hard-fought sourcing freedom while much of Europe has still to face these challenges.

As we stand on the (possible) brink of economic recovery for the UK private sector, it is vital that the failures of protectionism are recognised across Europe and the rest of the world. When we stop lending, spending and generally working with others organisations to succeed, things just grind to a frustrating and catastrophic halt. We are making a stand as an association and hope the expansion of the EOA will help the message spread more and more across Europe.

The company of the future should have no qualms about outsourcing and see no boundaries on the map of world skills. As the wheels of the economy slowly jump back into life, companies must re-recognise these realities as they start to recover and work out what it takes to succeed in the 21^st Century.

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The public sector recession is on its way

With the recession apparently coming to an end, 2010 promises to be a game of two halves for the UK.  The private sector will be heartened at the prospect of increased capital flows and customers finally loosening the purse strings. For the public sector on the other hand, things don’t look half as rosy.

In fact, it is fair to say that the public sector’s recession hasn’t even begun yet. But it will soon, that’s for sure, and it doesn’t look like we’ll have to wait for the predicted Tory rout for this to happen. The extent of repercussions of the UK government’s banking bailout could become clear as early as the Pre-Budget Report on Wednesday 9 December.  Sources tell us that a ‘Comprehensive Spending Review’ is on the cards, setting out departments’ budgets for three full years from April 2011. Figures currently being bandied about are truly alarming, but also in-line with what needs to be done. The spending review is predicted to include 30 percent reductions in resources and 50 percent in capital spends, and local government will not escape with much better terms.

The private sector has already suffered the first round of consequences of the recession and they have made the necessary changes cutting staff and spending to the bone. For them it now depends on whether the recession really is over, or is just being held a bay (the cynics would say until after the UK general election in May).  Out of prudence the private sector is looking at outsourcing to help them contain costs and improve services through volume based contracts. This is also allowing them to focus on recovery and growth without the risks and investment of fixed assets and full time staff.

It is clear that the private sector has already learnt the recession’s harsh lessons and now the public sector must do the same. Those on the front line of public sector procurement should be taking advice, speaking to their private sector counterparts and working to understand the sizeable part that outsourcing will have to play in their survival now and in the future.

And what better place to learn than at the NOA’s Annual Sourcing Summit next Wednesday and Thursday. It’s time for the public sector to think private and, with end-user case studies from Aviva, Easyjet, Zurich, BP and more, I can think of no better place to start.

Lies, damn lies and statistics

More statistical confusion hits the press this week with the release of the latest 3Q09 EMEA TPI index. According to the latest round of outsourcing research, ‘Europe’s Outsourcing Market [is] Lagging Rest of World.’ Why the research only highlights Europe when they’re also taking about the Middle East and Africa is unclear; perhaps just an over-zealous press officer? Either way, the research provides an interesting and rather stark contrast to what so many other industry voices are saying. Whatever happened to ‘budgets are falling so outsourcing will grow’?

Some of the most recent positive industry voices include:

• Recent research from the NOA found that the UK was spending 12 percent more on outsourcing in 2008 than 2007 (we haven’t carried out 2009 research yet, but indications are not suggesting less).
• Research from Pierre Audoin Consultants, found that software and IT services revenues from the UK in 2008 had increased by three percent over 2007. It also picked up on big growth in UK life and pensions outsourcing.
• Research from Datamonitor this July found an increase in the largest of deals and growth in smaller outsourcing arrangements.

The central problem it seems is trying to put ‘European outsourcing’ into a relatively small box. By assessing only those deals above €20 million such research can’t provide a full picture of what’s going on. And the trouble with this is that the media assumes all hell is breaking loose in outsourcing when the reality could be quite different. In fact we’ve seen some important trends which tell a rather different story.

Some of these are: an increase in multi-sourcing across the board as end users hedge their bets, create supplier competition and push for the best service at the best price. Another is the growth of interest in outsourcing from SME’s as new offshoring locations target smaller-scale, niche services. And a third is a move by end users to sign smaller-scale, shorter-length contracts. All these trends reduce Total Contract Value, creating many new contracts, but these are deals that effectively ‘fly’ under TPI’s radar. The research actually alludes to this trend too but makes little of it, saying “Nevertheless, TPI continues to observe significant activity in the smaller BPO contracts (€5m -€10m) space.”

The fact is, deals over €20 million are decreasing, but this is largely due to organisations, both public & private starting to adopt a Sourcing Strategy (I know Gartner have been telling us to do this forever!) which then reflects changes in sourcing rather than an overall drop-off in outsourcing interest. Think about it – how many announcements have you heard recently about companies reducing their outsourcing, or bringing work back in-house?

None, exactly.

Alongside this is a healthy new interest from non-traditional outsourcers as outsourcing and offshoring becomes more accessible to smaller companies.

Such changes will increasingly buoy the industry and offset, to a large extent, the fall in large outsourcing deals. In light of such trends perhaps it’s time to reassess the way we define the ‘outsourcing market’ in order that we can all have a better view of what’s really going on.

 

Public sector outsourcing – get ready for round two

So, it’s finally happened. The public sector has been told, in no uncertain terms, that outsourcing, real no nonsense outsourcing, will be necessary in 2010 and beyond. After both the Tories and Gordon Brown’s ailing government both openly admitted that public sector spending cuts are necessary, those on the economic front-line are starting to work out what this actually means in reality.

The hard truth has been delivered this week by the CBI, a body those in public sector procurement will hopefully listen to. Its report, or ‘Blueprint for Balancing Budget and Supporting Economic Growth’, states that ‘an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16’, this is no mean feat when you consider the various inefficiencies that have plagued the public sector in the past. The report goes on to suggest, ‘allowing the private sector to provide non-core activities, such as back-room functions. This could save £30bn by 2013-14.’ While their estimates may be a little ambitious, they do serve to demonstrate the potential benefits of renewed outsourcing in the public sector.

But that’s the problem that many in the public sector are still struggling with; we’ve all been here before haven’t we? Remember that other public sector outsourcing rush, where the NHS’ NPfIT overran by billions of pounds and DfES’ Individual Learning Accounts, with endless overspend and internal issues. Let’s not even speak of the Child Support Agency’s seemingly endless IT saga.

The legacy of problems past is, understandably, a sizeable reticence towards commencing new projects. Those that have been stung by poorly delivered projects will be loathe to ‘dive’ back in, while those that watched from the sidelines as their sector counterparts were trounced in the press, will be keen for continuity above all.

Further outsourcing bashing by ITV this week, complete with tacit allusions to the NHS (although the health service was in no way implicated in the programme), will do little to boost confidence.

But the change is coming and there are various reasons why this isn’t a bad thing. For one, as we’ve seen, these cuts will have to come from somewhere. Eking out another £30 billion, one quarter of the additional savings stipulated by the CBI, just cannot be done by simply being a little more efficient. These are big numbers, it means transformation, so increased outsourcing has to, and will, happen next year.

The other reason is the increased maturity of suppliers and those responsible for outsourcing in the sector. Just last week the NHS Shared Business Services won two awards at our annual ceremony for both Best BPO Project and Outsourcing Professional of the Year. The joint venture, from the Department of Health and Steria, has gone from strength to strength after its creation in 2008. Just recently a further eight NHS bodies have signed up with the organisation and there’s seemingly no stopping them.

So, this time around the industry will have to look back at outsourcing and actually get it right and it’s examples like NHS Shared Business Services that will help them do so. The NOA is also doing its bit with the launch of its Public Sector Transformation Steering Committee, set up to develop and disseminate best practice outsourcing advice for public sector outsourcers.

The sector will need to draw on this combination of best practice advice and visible success to ensure that public sector ‘outsourcing 2.0’ both cuts costs and maintains the service that the UK public deserve.

And the future?  Maybe the public sector moves away from  DIY to commissioning services!

Offshoring’s sooty secret?

I picked up on an interesting news story this week that opens up a whole can of worms for the sourcing industry and the process of globalisation as a whole. The concept of ‘embedded’ greenhouse gas emissions has been covered numerous times before, but not by someone so close to the incumbent government. This week, the government’s new chief energy scientist, Professor David MacKay, commented, with reference to the outsourcing industry, that ‘the UK’s apparent reduction in carbon emissions since 1990 is merely an “illusion”, because manufacturing has been outsourced to developing countries’.

To anyone who considers the impact of business, and personal activities for that matter, on the environment, this concept is nothing new. It’s also something we’re discussing from a sourcing perspective as part of our NOA Green Steering Committee initiative, designed to help in tackling the big environmental issues facing today’s businesses. The fact is everything we do, use and consume tends to have an embedded carbon footprint and that many of the supposedly green things we do simply lead to carbon consumption in other areas – take electric cars and hydrogen fuel cells as an example. Where do people think the electricity comes from?

On MacKay’s logic ‘Western’ nations have a much longer way to go to reduce their overall carbon emissions as they need to fully take into account all greenhouse gas that has been produced as a result. He also states that ‘if historical per capita carbon emissions were taken into consideration, the UK was also among the top three world polluters alongside the US and Germany – whether it is currently responsible for only two per cent of current global emissions today or not.’

But there is a real problem with this logic, especially in the historical argument. For example, how did the British Coal Miners know that in 1910 they were contributing to the overall greenhouse effect. The science of global warming has only been fully developed over the last 30 years and only gained popular credence in the last 15-20 years. If we follow the logic perhaps brewers should pay compensation for the families of hop pickers who came down to pick hops, as they ‘cured consumption’ – they didn’t and the damp conditions killed many. But they didn’t know this at the time. Such an approach simply isn’t practicable.

The problem is that pursuing a historical standpoint creates a truly insurmountable hurdle for the UK and UK companies to tackle and also poses the question ‘how far back do we go’. Such an idea makes the work that companies are putting in today to reduce emissions look insignificant. Of course most companies can and should do more but focusing on the past is not helpful in this respect. It could also result in crippling reduction targets which would be dangerous to competition; something that is essential to creating new environmental innovations.

But the sourcing industry shouldn’t take this as a call to do nothing. Global warming is, of course, a global problem, and all those involved in offshoring shouldn’t be complacent. There are a lot of offshoring suppliers out there making big strides in lowering the environmental impact of their service offering. Green data centres, BPO centres with recycled water, solar electricity and a plethora of energy saving devices, are just some of the innovations on offer to the discerning outsourcing end-user. If you want to read more on the subject, have a look at this article published a month or so ago. Suppliers that see these ‘greensourcing’ moves as cynical marketing ploys should also take heed. Increasingly forward thinking companies are including stringent green factors in their procurement processes. This is only set to increase as new environmental legislation comes into force in the UK, Europe and US. Also, as the public sector finally turns its head to the possibilities of offshoring, as the NOA has long predicted, expect green requirements as a matter of course in its own procurement process.

The central point of this all is that the responsibility for tackling climate change lies with people, companies and governments across all countries. And It’s about the here and now, not accounting for mistakes and occurrences long past. Companies must work with their suppliers, or work with the right suppliers and in the right countries, that can provide what they require at a carbon cost that is sustainable and within their own targets for reducing their global carbon footprints. Taking a proactive approach means staying ahead of the game where government targets are concerned and really helping to make a positive impact. This is an approach that all companies can afford to take on an issue now too grave for any of them to ignore.

CRC – Friend or foe?

The green agenda has increased in significance at an incredibly rapid rate over the past few years. New legislation, with its hefty carbon reduction targets, means that all businesses must incorporate green strategies into their overall business plan.

The Climate Change Act 2008 begins by imposing a statutory duty on the Secretary of State to “ensure that the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline”. Right now, this target seems more than ambitious; in fact, judging by the lack of progress, the target seems unreachable.

However, the UK government is trying its best to offer ‘incentives’ to big businesses to reduce their carbon footprint. The Carbon Reduction Commitment (CRC), currently being finalised by the Department for Energy and Climate Change and due to come into force in April next year, aims to target around 20,000 large public and private sector organisations for carbon reduction.

Of course, like any other piece of green related legislation, CRC has both rewards and penalties associated with it. Those businesses which meet the outlined criteria, deliver the requested reports on time and are seen to reduce their carbon footprint get rewarded while those that don’t get hefty fines imposed.

At first glance this seems a fair enough, if a little dated approach. However, there are aspects of the CRC initiative that some organisations are starting to question. The NOA has its own Green Steering Committee that looks to address the green challenges facing the outsourcing community. Of course, most of the discussion is focused around the upcoming CRC initiative and how it will effect the outsourcing industry (a white paper of the initial discussion can be found on our website) and the committee has highlighted particular aspects of the CRC initiative that may have a significant impact on the major players in the outsourcing world.

It seems that data centre suppliers could face hefty penalties, despite having a positive effect on carbon reduction. The way carbon emissions will be measured under CRC is simply not broad enough. If an end user outsources their poor efficiency, energy consuming data centre to a supplier they are effectively shedding their carbon impact. In turn the supplier will either do away with the end user’s data centre entirely, switching to their own high tech, greener and more energy efficient alternative or, depending on the contract, will kit out the end users data centre with new technology. Either way, the supplier is taking a high carbon footprint process and making it a much greener one.

Under the CRC initiative, the supplier could be penalised. There would undoubtedly be an increase in the energy consumption and carbon footprint the supplier has, simply because they have taken on another data centre. This would be detrimental to the supplier when it came to reporting emissions and energy consumption. In turn, the end user is able to claim a reduction in carbon emissions and get rewarded. The CRC regulation does not take into account that, without the supplier, the overall carbon impact would be much worse.

This current unfair form of measuring reduces any incentive associated with suppliers offering greener technology. Client demand will act as the only catalyst for a supplier to switch to green technology. However, that supplier will then pay for that investment as well as any carbon trading or offsetting that needs to take place in order to make up for the increase in carbon emissions.

The outsourcing industry is no stranger to the green agenda. Many large organisations within the industry have already implemented green policies. However, it is estimated that approximately 70 percent of businesses don’t know where to start when it comes to meeting the CRC regulation. All in the industry are in need of clear guidance and policies that highlight exactly what needs to be done and what impact this will have on business. Measurement needs to be fair and stretch beyond the current limitations. Ultimately the business community as a whole is in dire need of a thorough review of what makes an organisation green. This is a call to action for all businesses and with groups such as the NOA Green Steering Committee raising these pertinent issues, the policy makers will have to sit up and listen.

Innovate for the Future

The NOA has predicted, for some time, that innovation will be a really key feature in the future of outsourcing.  Companies will look for service providers to not just fulfil their day to day requirements, but to offer something new, fresh and ahead of the game.  A recent article in McKinsey Quarterly has highlighted the fact that some suppliers are simply not pulling their weight when it comes to innovation.

India has approximately 50 percent of the business and technology offshore outsourcing market.   This is a vast chunk of an industry which is predicted to be worth $500 billion by 2020.  However, McKinsey highlights that this market share is predicted to drop.  One of the key reasons for this; the lack of innovation amongst Indian suppliers!

India, despite priding itself on its technological offering, accounts for less than one percent of the patents issued around the world.  End users are becoming more sophisticated in their procurement choices.  They don’t just want the standard work to be carried out, they want bespoke improvements and technological advancements that keep them ahead of the game, if India can’t provide this then end users will go elsewhere.

Of course there are other factors that are contributing to the dip in India’s market share.   Attrition rates are increasing at a rate of knots and the country can no longer boast a cream of the crop workforce for all companies offshoring to the outsourcing powerhouse.  It seems that, unless you are a Google, Microsoft or IBM, the Indian workforce doesn’t really want to know.  Graduates have realised that their skills are prized and are no longer looking to do the lower level work that was traditionally the foundation of the Indian outsourcing economy.

India’s infrastructure is also under strain, something that the McKinsey article highlighted.  They reported that the Indian outsourcing epicentres (Hyderabad, Chennai etc.) have a rapidly depreciating infrastructure.  Power cuts, water shortages and inadequate telecommunication means that India is yet to spread its outsourcing market to new areas, which are key if service providers are to take advantage of a fresh batch of graduates and a reduction in land costs.

If you compare this situation to the new upcoming destinations such as Sri Lanka, with a well skilled work force and excellent infrastructure, Kenya, with its new fibre optic cable set for completion this year and Eastern Europe, great for nearshore savings, then India could emerge as a destination with a lot of work to do.

A lot of the big Indian players are moving into new destinations in order to suck up the indigenous workforces and offer a broad spectrum of services to their clients.  Right now, a UK end user can use a supplier such as Infosys and not have to offshore their processes to Mumbai, chances are, their offshored work could be as close as Poland or Hungary. So in essence, Indian providers are protecting themselves by having a presence in most emerging destinations.

However, by ignoring the rise in innovation, Indian service providers are leaving themselves vulnerable to a whole host of competition.  We could find the big Indian players falling down the value chain as smaller innovative suppliers, who meet the sophisticated end user’s criteria, work their way up.

And putting its money where its mouth is, to paraphrase an old adage, the NOA is looking to appoint an innovation Board Member.

Quite simply, the time to innovate is now!

British Council takes the leap

My last blog focused on public sector offshoring; low and behold the week that the blog gets published, The Times prints a story on how the British Council is offshoring 100 jobs to India. Of course this announcement sparked a furious debate amongst the public, unions and the upper echelons of the public sector. The Public and Commercial Services Union (PCS) are considering lodging a tribunal application in response.

Since the impact of the downturn the UK has been terrified about offshoring work, believing that by doing so, it is in some way harming its own economy.

Public sector offshoring is considered a particularly dirty sentence and is approached with such a great deal of caution that it is astonishing the British Council managed to get this far. It is however no surprise that the public sector is looking to make use of offshoring. It has a £35bn efficiency target and is predicted to have budget cuts of up to £50bn, how could it not explore the possibility of offshoring?

The general public need to see the bigger picture. More often than not organisations will be using these offshoring locations to conduct lower level work retaining much of the higher level operations on shore. The savings gained should allow for more money to be ploughed back into the economy and into front end services. Quite simply, if the UK government refused to offshore/outsource the economy as a whole would suffer further blows and tax payers would almost certainly see a reduction in service.

The British Council did get a few things horribly wrong however. The NOA continually stresses the point that clear and transparent communication is one of the most important aspects of a successful outsourcing/offshoring operation. Interested parties such as unions should always be included in outsourcing discussions from the outset. If the PCS had been brought in at an early stage, the British Council may have saved itself a huge amount of aggravation. Organisations should always be wary of keeping people in the dark about outsourcing.

Governments need to ensure maximum value for money in any project they undertake, especially during a time of financial turbulence. Protectionist attitudes towards offshoring will hinder the chance for the public sector to maximize efficiency and turn cost savings into tax cuts for the public.

Public sector offshoring- Time to discuss

The public sector is facing some of the most aggressive spending cuts and efficiency targets in recent memory. Towards the end of last year the government announced a savings target of £35bn, with a lot of emphasis placed on reducing the multibillion pound IT bill. Combine this with a predicted £50bn cut in public spending as well as the encroaching costly carbon reduction commitments and it is easy to imagine public sector managers holding their hands up in despair.

Outsourcing as a cost cutting strategy has had a murky past within the public sector. Massive IT deals have ended up costing tax payers more money, rather than relieving pressure on public sector coffers. However, outsourcing has matured within government organisations in recent years. Shared services has proved to be mostly successful (especially within the NHS) and procurement procedures seem to be improving.

Despite the improved approach to outsourcing, government bodies have cringed at the thought of offshoring work. With such hefty targets, it is unlikely that adequate cost savings can be made by just handing work to UK based suppliers. So the age old, incredibly heated, debate raises its ugly head once again: Should the public sector look to offshoring to cut costs?

There are a host of good reasons why the public sector would want to take advantage of offshoring. First and foremost, cost. Offshoring usually means at least a 10 percent decrease in costs, it also means taking advantage of a well skilled workforce so quality levels should be maintained, if not improved. These savings could go a long way in helping organisations meet the strict cost cutting targets.

However, offshoring is never that clean cut, especially in regards to the public sector. The question of whether the government has a responsibility to keep jobs within the UK is always highly debated, with many believing it should run like a commercial organisation and try and minimise cost and in turn save taxpayers money.

Data security is also another touchy point when looking at offshoring. Key offshoring destinations such as India and China do not have the most stringent data security measures, so how will the public feel knowing that their national insurance details are held on a database in Bangalore? However, it must be said that most catastrophic public sector data security breaches have occurred here in the UK; provided strict SLAs are set that replicate homeland protocol there is no reason why data would be safer in Birmingham than in Bangalore.

As the verdict isn’t out yet on public sector offshoring, the NOA is keen to hear the industry’s opinion on this and is calling upon members from all walks of business life to offer their opinion. The one thing the public sector can’t do is sit back and ignore a potentially significant cost saving initiative.