Public sector outsourcing on rise as private sector shrinks

According to new research from advisory TPI, public sector contracts awarded in Europe, the Middle East and Africa (EMEA) in the first half of 2010 stood at over €9 billion, with the UK public sector accounting for 86% of EMEA public sector spend.

 

Between 2005 and 2009, the Public Sector accounted for 57% of outsourcing total contract value (TCV) in the UK compared to the commercial sector’s 43% share. 

 

With a 75% share of UK outsourcing spending and an increased appetite to explore outsourcing options, the public sector has become an increasingly important target for service providers to help balance the reduced opportunities in the commercial sector says TPI.

 

Before the general election in May, the Conservatives had talked of spending more on outsourcing to cut costs. This week Prime Minister David Cameron suggested in India that the UK public sector was open to offshoring, while Cabinet Office Minister Francis Maude has raised the possibility of altering the legal requirements for moving in house staff over to outsourcing companies. 

 

But the private sector seems to have been shying away from outsourcing. A total of €3bn was spent on private sector outsourcing contracts with a deal value of more than €20m, down from €5.2bn in the first six months of 2009, according to a report from business support provider TPI.

 

The total figure for commercial outsourcing contracts in EMEA fell to €13.3bn in the first six months of the year, down 6% from the first half of 2009. Global spending remained flat compared with same period last year, at around €32bn.

 

"The market appears to be following a first-in, first-out pattern, with the US now showing some signs of sustained recovery while Europe has yet to see an upturn,” said TPI president Duncan Aitchison.  “Historically, the UK has lagged the US by 18 to 24 months. We will watch with interest to see if signs of improvement in EMEA occur more quickly."