Local government outsourcing spending increases by nearly a quarter

The local government outsourcing market saw significant growth in 2015, with the total value of contracts signed by local authorities up 23% year-on-year, according to the arvato UK Outsourcing Index

The research, compiled by business process outsourcing (BPO) provider arvato with industry analyst NelsonHall, found that deals worth £756 million were signed by local government organisations last year, accounting for 13% of the total value of outsourcing agreements signed in the UK in 2015.

According to the research, local government contracts grew in size and length last year as the sector continues to face increasing efficiency challenges. Average contract values grew by 30% year-on-year to £37.8 million, with deal lengths rising to an average of 66 months, representing a 29% increase over the same period.

The data revealed a swell in new work in local government, with new agreements accounting for 55% of deals signed last year, up from 38% in 2014. 

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Three quarters of the deals covered BPO services, with councils mainly acquiring HR, revenues and benefits and multi-process customer services.

Debra Maxwell, CEO, CRM & public sector, arvato UK & Ireland, said: “Authorities really focused on transforming their services to meet citizen demands and deliver new savings in 2015. In the wake of major welfare reforms, and with new funding reductions announced in last November’s Spending Review, councils need to fundamentally re-think the way they work.”

“We expect to see more new approaches to transformation in 2016, such as moving services entirely online, sharing services virtually and introducing robotic process automation. Private sector partners will continue to play a key role by bringing in expertise and technology to help make those changes,” she added.

The research is based on an analysis of all outsourcing contracts agreed in the UK market during 2015.


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