The public sector will see a surge in outsourcing during 2010 as it attempts to deal with budget cuts, according to new research by the National Outsourcing Association (NOA).
The spending deficit brought on by the UK government’s banking bailout will force public sector IT bosses to slash costs without impacting service delivery levels, and the NOA believes that they will turn to outsourcing as a result.
“The sector will need to explore more shared services and outsourcing options after the General Election than some currently believe. Efficiencies mooted in the Read OEP simply won’t be enough compared to the amount of government borrowing going on,” said NOA offshoring director, Mark Kobayashi-Hillary. “The sector will be forced to explore extensive changes and new operating models rather than just efficiency drives if they want to escape from this increasingly large black hole.”
Other 2010 predictions from the NOA include a revision of multisourcing or multivendor deals, driven by a desire from end users to simplify outsourcing deals; the rise up the agenda of environmental issues; an increase in SMEs looking at outsourcing as a way of reducing overheads; and an increase in the number of call centres in China as well as other outsourcing facilities in the Philippines, Brazil and Russia.
Business Process Outsourcing (BPO) is also tipped to make a big impression this year. It currently makes up around 3% of the outsourcing market but the NOA believes that it could grow to over 5% in 2010.
The NOA also claims that as traditionally-outsourced services such as CRM and storage and increasingly delivered via the cloud, the on-demand model will gain prominence in the outsource industry this year.
“2010 will be a game of two halves for outsourcing. On one hand we see optimism rising in the private sector with companies using outsourcing to seize growth opportunities and re-skill with minimal risk. And on the other we see what amounts to a ‘public sector recession’ wreaking havoc on those people and organizations in charge of public service delivery,” said NOA chairman Martyn Hart. “Outsourcing and offshoring can, and will be used positively, in both respects so we expect sizeable sector growth across the board.”
