Bridging the 
IT outsourcing skills gap

In the last few months, the wind of change has been blowing through the way public sector deals with procurement for IT, with large suppliers feeling the full force of the gale. We’ve seen Chancellor George Osborne pledging to support investment in enterprise as part of his budget, which, allied to the Cabinet Office’s new ICT strategy, has served to underline the coalition’s determination to open up the IT procurement process to more than just the leading names.

IT outsourcing in the public sector has traditionally been the domain of a small number of big-name suppliers, most of whom have their own specialised staff.

But now the government is looking to move away from a model in which it outsources IT to one supplier to one in which it uses a large number of individual specialist suppliers, known as multi-sourcing. If this is the case, then more and more departments in the public sector will need to manage the transition towards smaller and medium-sized organisations, particularly in light of the Cabinet Office’s ‘presumption against’ IT contracts above £100m.

Managing the shift
However, it’s worth noting that there are a number of issues which need to be addressed, if this shift in policy is to prove successful. The first of these is that managing this transition could present a number of problems, not least of which is that very few people in the public sector have experience of dealing with outsourcing contracts, which means that there’s an obvious skills gap that needs to be bridged if existing public sector workers are to successfully move over to the private sector.

This could mean that workers who are less skilled or knowledgeable in this respect could be less attractive to medium-sized private sector organisations which might be looking to transfer staff. A recent survey in the Financial Times found that 57 per cent of private businesses were not interested in taking on former public sector workers and 52 per cent believed that these workers are not up to the job. With public sector outsourcing on the rise, surely it’s important to find a way to challenge these perceptions?
The second issue is whether or not those who will be responsible for managing public sector contracts have the required level of knowledge to do so effectively. At times there can be a presumption that IT outsourcing is a process whereby the cheapest supplier of a particular service is identified and left to get on with it. However, it’s worth remembering that managing an outsourcing relationship effectively can be a challenging task, and that every year there are examples of contracts which have not worked for no other reason than a lack of due diligence.

For this reason, a great deal of care must be taken when it comes to selecting a supplier that can provide the best cultural fit, with the same values.
The risks
It’s clear, then, that the government’s new procurement strategy is not without risk. After all, many large, established IT suppliers have a solid, established infrastructure, with resources that allow government departments to deliver projects in a fraction of the time it would take other suppliers. Perhaps, moreover, there’s a much greater risk that in opening up the procurement process to smaller suppliers, who have little or no experience in dealing with public sector procurement, are we running the risk of throwing the baby out with the bath water?

It’s worth remembering that large suppliers of ICT outsourcing have been dealing with the public sector for many years, which means that they have an increased understanding of its requirements, and what it needs to make the relationship a success. It also seems to have gone unnoticed by many that the Cabinet Office’s announcement related largely to ICT, which typically refers to the provision of hardware and software.

Smooth transitions
Most major outsourcing and shared services contracts are also dependent to a large extent on building relationships and understanding business processes which, if not effectively established, can lead to operational inefficiencies. If the government is to ditch most of its larger suppliers and open the procurement process up to SMEs, surely it will be vital that there is an element of knowledge transfer in place for all of these relationships to ensure that the transition causes as little trouble as possible?

The bottom line has to be that those in charge of public sector IT procurement need to view outsourcing not just as a way of trimming the fat and cutting costs but as a way of delivering real value. For some, this will mean shifting the way the way departments perceive outsourcing suppliers so that they move away from operating within the traditional vendor/supplier relationship, towards understanding how they can work together collaboratively to deliver the best service.

Perhaps, however, the best way to empower those with a direct interest in public sector procurement, and enhance their skills in and knowledge of outsourcing, is to invest in training? NOA Pathway, the NOA’s training arm, has already been receiving an increased number of queries from local government, in the wake of the government’s recent announcements, with an eye firmly on supplementing the existing workforce and effectively managing outsourcing processes.

By educating public sector workers about how outsourcing works, and equipping them with the skills to work in an outsourcing environment, public sector workers will be more attractive to private sector suppliers taking on private sector contracts.
A focus on quality
The announcement from Communities Secretary Eric Pickles, which signalled the government’s intention to scrap the two tier outsourcing code for local government, can be seen as the creation of a new criterion for those looking to outsource, which puts an emphasis on quality.

The code, which was introduced by the Labour government in 2003, was aimed at preventing the creation of two-tier workforces by protecting employees recruited to work on outsourced public sector contracts from being appointed at lesser rates in comparison to transferred employees. Its abolition seems to be proof positive that the tendering for public sector must focus increasingly on cost efficiencies and quality of service, without having to worry about other considerations.

In truth, news of the code’s imminent abolition comes as no real surprise to anyone. It does, however, demonstrate that public sector outsourcing is on the rise. Clearly, IT will be the principal beneficiaries of this, but it’s worth emphasising again that if the public sector is to successfully manage the transition from large, established suppliers of ICT to smaller organisations as part of a move towards multi-sourcing, then it is important that the necessary measures are put in place.
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