Public sector - Business issues

Public services must deal with a collapse in revenues.

The American budget crisis, the global financial crisis and the eurozone sovereign debt crisis all have painful implications. As evidenced by the British Government’s Comprehensive Spending Review of 2010 which mandated £6 billion in cuts by 2015 - double the £3 billion initially forecast¹.

Cuts, of course, are only one response available to deficits and shortfalls. Others might include debt restructuring, printing money – or even defaulting.

But for now, it is cuts in public budgets that are causing pain to a degree which, as The Economist points out, Governments may not be able to sustain: “…it is not clear how long they can go on asking for sacrifices in order to pay what are perceived to be foreign creditors. In the end, the price is too high…”

So there is an urgent need for those involved in public services to find a way of doing more with less. In fact, of doing much more - with much less.

Looking back to the recent past may help.

A variety of private-public collaboration and partnership models were in evidence before the current crises made matters urgent. Now must be the moment to test their potential for producing savings and efficiencies to the full.

Public services organisations have the opportunity to capitalise on the procurement disciplines and expertise routinely used by the most successful private organisations and to revisit their priorities in outsourcing.

Despite a mixed history in the public sector, outsourcing is again being discussed as a way forward in providing public services that are both excellent and affordable:

“Like it or not, central government has spent all the money saving the UK
banking sector and now it's time for the public sector and taxpayers to pay for it. Politics and personal gripes aside, the elephant in the room is about to start trumpeting that the sector cannot achieve its lofty savings targets alone. The private sector, in the form of outsourcers, simply has to play a part in relieving the burden³.”

At its best, this will be a new outsourcing tailored to new conditions: ‘Transformational Outsourcing’.

‘Transformational Government’ is already part of the public sector vocabulary in the UK, driven by a bid to improve the quality and cost-effectiveness of public sector IT systems and technology-led public services.

Perhaps ‘Transformational Outsourcing’ now needs to join it, focused on outsourcing strategically important tasks with the aim of delivering better public services for less?