December 22, 2004—The UK’s public sector is on track to outsource a further 20bn worth of services, representing a growth of 50% over three years.
The outsourcing market will grow from just under 45bn this year to more than 67bn by 2006-7, according to new research from public sector specialist Kable.
One of the main factors influencing the boom is the government’s efficiency agenda to achieve 21.5bn in savings by 2008 and cut more than 80,000 civil service jobs. Whitehall outsourcing alone could reach 7bn a year as a result of the Gershon Efficiency Review, Kable says.
Head of forecasting Karen Swinden argued there is “still plenty of scope” for the market to grow further. So far, she said, outsourcing only accounts for 10% of public spending.
Kable reports that growth is fastest at the Ministry of Defense: starting from a relatively low base, it will rise from 1.1bn this year to 4.2bn in 2006-7. In the NHS, the market will grow by more than 150% reaching 16.4bn in three years’ time. Outsourced NHS IT projects are worth a total of 6.9bn with an annual expenditure of 725m, Kable says. <p.Local government, which has an existing market of 6-7bn a year, is likely to have a relatively lower growth rate at 16% over four years, notes the forecast.
Central government currently outsources 4.6bn of its work overall. With IT, Whitehall’s outsourcing is set to increase to 1.2bn by 2005-6, and is then expected to grow by 6%, according to the report.
Reprinted with permission; copyright 2004 i-FM
