The total value of public sector outsourcing contracts awarded in the UK is down by almost 50% during the first half of 2011, according to research from outsourcing advisory firm, TPI.
The volume of outsourcing deals in the UK’s public sector increased in line with the rest of EMEA at 70% in the first half of 2011. However, the UK public sector’s total contract value of £5.1 billion represented a decrease of 49%, contrasting with 40% growth in EMEA’s TCV over the first half of 2011.
According to TPI, budget pressures are driving the outsourcing increase, with public sector organisations aiming to improve operations in Europe and renegotiate contracts to save money in the UK.
Commercial outsourcing also overtook public sector outsourcing in the first half of 2011, for the first time since 2005. In the period between 2005 and 2010, the public sector accounted for 60% of all outsourcing in the UK, while in the first half of 2011, it only accounted for 49%.
Steve Tuppen, president of Compass (a sister company of TPI which was involved with the research), said that service providers had recognised the UK’s need for better value for money.
"With the recent…public sector funding shifts, outsourcing activity has been re-evaluated [in the UK]," Tuppen said. “Although these same providers have previously offered cost reduction and changes to their delivery models, it is only now that pressure to reduce costs across the public sector has heightened that authorities are taking a step back to evaluate outsourcing activity and have the clarity to review the objectives, targets and outcomes."
Overall, UK public sector outsourcing still dwarfed that in the rest of EMEA, with 71% of all public sector outsourcing in EMEA taking place in the UK. That number is lower than the 86% of all public sector outsourcing that the UK conducted between 2005 and 2010, a total value of €111 billion.
BT, Capita and Capgemini have been the top outsourcers for the UK public sector since 2005, and continue that dominance in 2011, the report said.
