According to Equaterra’s 2010 survey of IT service providers serving UK companies, more companies are choosing to multi-source IT projects as opposed to signing large IT contracts with a single supplier - with most respondents using three or four suppliers compared to an average of 2.4 the previous year. This coincides with the UK Government demanding smaller contracts from a wider range of suppliers and trying to open up business to suppliers that have typically remained outside public sector IT. The Government has announced it will increase SME procurement to 25 per cent of public sector contracts, which in itself will lead to more multi-sourcing contracts.
The industry has seen a standardisation of various service offerings, meaning lower costs, together with a maturing market, which has effectively resulted in better client understanding and awareness of what is available from other suppliers in the market. Is this having an effect on the way in which companies routinely source their IT services?
Over the last five years there has been an increase in the amalgamation of multi-sourcing and single supplier contracts within the private sector, (e.g. – where one supplier has been awarded the contract but clients can influence which suppliers are used for the different services within that contract). This is not a new model within the industry but does it now represent the ‘best deal’ commercially? It allows the ownership of the contract to be coherently managed by one supplier, but at the same time maximizes the client’s potential for flexibility and value for money as it allows the services within the contract to be sub-contracted and outsourced to different suppliers.
Could the Government’s willingness to gradually move away from large contracts with single suppliers and the increased industry-wide awareness in both the public and private sector of what smaller suppliers are capable of signal the not too distant end of single supplier outsourcing?
Wednesday, 6 April 2011
Wednesday, 20 October 2010
Public Sector - The Golden Age of Outsourcing
With the Government’s Comprehensive Spending Review today, all will be revealed and the most savage assault on the public purse for over 80 years will be made.
With approximately £83bn per year due to be taken out of public spending between now and 2015 to plug the financial hole the UK has found itself in, what effect will this have on the delivery of services through Government departments? What of the ability of those departments to survive savage head-count and budget cuts, which in some cases will be as much as 40%?
A taste for outsourcing has been emerging within government departments with the IT sector being no exception. Earlier this year, leading analysts Seymour Pierce reported that over £80bn of public sector services are currently outsourced. With the current budget cuts, this figure is predicted to increase to over £140bn by 2015.
With government IT one of the areas hotly tipped for the slash of the sword, it begs the question; what will happen to the many talented IT staff who will be affected the cuts? Are redundancies expected to be rife? Is there another solution?
There is clearly a need for many of those key personnel; the public sector, however, is looking for a better return on investment with a streamlining of departments. This is expected to be delivered through a combination of conventional private sector outsourcing and the introduction of the transference of knowledge. The latter solution would be to harness the knowledge currently in place within public sector departments by an outsourced contractor taking over the employment of many key staff under the Transfer of Undertakings (Protection of Employment) Regulations, or TUPE as it is more commonly known.
With this in mind it is clear the private sector can offer the government many solutions to the problems of streamlining departments and continue the outsourcing trend of my many local authorities and county councils. Outsourcing will minimise redundancy and is expected to make IT departments more effective, whilst adhering to expected budget cuts. Is this a new golden age for private sector outsourcing?
Toni Kendall-Troughton
CEO – Stage
With approximately £83bn per year due to be taken out of public spending between now and 2015 to plug the financial hole the UK has found itself in, what effect will this have on the delivery of services through Government departments? What of the ability of those departments to survive savage head-count and budget cuts, which in some cases will be as much as 40%?
A taste for outsourcing has been emerging within government departments with the IT sector being no exception. Earlier this year, leading analysts Seymour Pierce reported that over £80bn of public sector services are currently outsourced. With the current budget cuts, this figure is predicted to increase to over £140bn by 2015.
With government IT one of the areas hotly tipped for the slash of the sword, it begs the question; what will happen to the many talented IT staff who will be affected the cuts? Are redundancies expected to be rife? Is there another solution?
There is clearly a need for many of those key personnel; the public sector, however, is looking for a better return on investment with a streamlining of departments. This is expected to be delivered through a combination of conventional private sector outsourcing and the introduction of the transference of knowledge. The latter solution would be to harness the knowledge currently in place within public sector departments by an outsourced contractor taking over the employment of many key staff under the Transfer of Undertakings (Protection of Employment) Regulations, or TUPE as it is more commonly known.
With this in mind it is clear the private sector can offer the government many solutions to the problems of streamlining departments and continue the outsourcing trend of my many local authorities and county councils. Outsourcing will minimise redundancy and is expected to make IT departments more effective, whilst adhering to expected budget cuts. Is this a new golden age for private sector outsourcing?
Toni Kendall-Troughton
CEO – Stage
Temporary Agency Workers – not so cost effective after all
Employing temporary agency workers has always been seen as an alternative to permanent employees in the IT sector. Companies can expand and contract as the work load dictates, with the slack taken up by contractors, now referred to as Temporary Agency Workers. Often, the employer sees agency fees as being high, without value and sometimes wholly unacceptable.
Employers often feel that a contractor takes a period of time to come ‘up to speed’ and having eventually grasped the fundamentals of the project and the company ethos, then leaves to pursue another project. Regardless of how ‘up to speed’ the individual may be, this perception by employers reflects negatively in the terms and conditions for temporary agency workers, which may be inferior to that of permanent staff.
Now the new European Temporary Agency Workers Directive, which was aired by Parliament in January 2010, is being reviewed before coming into effect on 5th December 2011. This new piece of legislation is being implemented to protect the rights of such workers. Being criticised for being complicated, it is seen as being vague and ambiguous. However, it is here to stay, so it is imperative the directive is totally understood and adhered to.
How will this new piece of legislation affect the employer and the employee alike? The main point is that after 12 weeks on an assignment, agency workers will be given equal treatment and conditions of employment as permanent employees.
That means the benefits package (pay, pension, holidays and health insurance) received by an agency worker will have to be on a par with that of a permanently employed member of staff. And then the Temporary Agency Worker leaves for the next project, never to be seen again.
Is there another way? We at Stage like to think so. Look out for the next blog.
Employers often feel that a contractor takes a period of time to come ‘up to speed’ and having eventually grasped the fundamentals of the project and the company ethos, then leaves to pursue another project. Regardless of how ‘up to speed’ the individual may be, this perception by employers reflects negatively in the terms and conditions for temporary agency workers, which may be inferior to that of permanent staff.
Now the new European Temporary Agency Workers Directive, which was aired by Parliament in January 2010, is being reviewed before coming into effect on 5th December 2011. This new piece of legislation is being implemented to protect the rights of such workers. Being criticised for being complicated, it is seen as being vague and ambiguous. However, it is here to stay, so it is imperative the directive is totally understood and adhered to.
How will this new piece of legislation affect the employer and the employee alike? The main point is that after 12 weeks on an assignment, agency workers will be given equal treatment and conditions of employment as permanent employees.
That means the benefits package (pay, pension, holidays and health insurance) received by an agency worker will have to be on a par with that of a permanently employed member of staff. And then the Temporary Agency Worker leaves for the next project, never to be seen again.
Is there another way? We at Stage like to think so. Look out for the next blog.
Wednesday, 26 May 2010
Is the Public Sector headed for an IT ‘ice age’?
This is the week when the Con-Dem coalition announced it is going to get this country back on its feet by implementing £6.2 billion of immediate funding cuts.
So, what was the outcome? George Osborne swung the axe on the totally misunderstood quango state, whilst chopping and felling the initiative that was the apple of Labour’s eye, the Child Trust Fund. Another £836 million savings will be made at the Business Department, as well as up to 300,000 jobs earmarked to go across the public sector. Of course, perks for civil servants and MPs were on the list, as were the British Universities who will lose £200 million worth of funding, as well as slashing university places by 10,000.
But what of the future of IT in the public sector as the blood runs in the streets of Whitehall? CIOs have been warned that the public sector is at risk, as fierce budget cuts and possible salary freezes are planned, which could herald the exodus of key IT staff. In addition, projects currently underway are to be reviewed. The probable outcome is the private sector is destined for a rush of IT staff looking to jump ship. This, coupled with an immediate freeze on spending on new public sector IT projects above £1 million with existing projects in the pipeline for the last six months in jeopardy, begs the question, what could be the outcome?
Technology underpins the performance of all businesses; public or private. Technology provides businesses with processes, methodologies and technical platforms to perform better, faster, more effectively and more profitably. Reducing head count in public sector departments may be seen as an immediate cost saving, however this deficit can be countered by making the business more technically innovative as long as the technology is in place and allowed to do its job. Cutting both man power and technology will have lasting effects.
What of the outcome? Certainly talented public sector IT staff will migrate to the private sector, if the sector can accommodate them. Certain skill sets may disappear from the arena completely, as is currently happening with the mainframe market, where technologists are retiring with no-one in line to replace them. Reducing funding to British Universities and cutting the number of graduates yearly may cause a drought in the talent pool. That’s just for starters.
Technology changes at such an alarming rate that applications and hardware get smaller, faster and cheaper. In 1965, the co-founder of Intel, Gordon E, Moore stated: “The computing power of a microprocessor will double every 18 months.” This became known as Moore’s Law. To date, this has been the case, providing us with cheaper, faster computers at an amazing pace. Now add to this hypothesises that the price of technology halves every 12 months and one can see that very soon, the public sector could be falling behind the technology trail.
With this in mind, and the public sector slashing budgets, putting crucial IT projects on hold, this will surely have an effect on the way the public sector operates and competes. With the reducing of head count and the freezing of salaries, coupled with the eventuality that key IT staff may make the leap of faith to the private sector, within the next six months, the offices of Government could be 18 months behind the technical curve and heading for an information technology ice age. Remember what happened to the dinosaurs!
So, what was the outcome? George Osborne swung the axe on the totally misunderstood quango state, whilst chopping and felling the initiative that was the apple of Labour’s eye, the Child Trust Fund. Another £836 million savings will be made at the Business Department, as well as up to 300,000 jobs earmarked to go across the public sector. Of course, perks for civil servants and MPs were on the list, as were the British Universities who will lose £200 million worth of funding, as well as slashing university places by 10,000.
But what of the future of IT in the public sector as the blood runs in the streets of Whitehall? CIOs have been warned that the public sector is at risk, as fierce budget cuts and possible salary freezes are planned, which could herald the exodus of key IT staff. In addition, projects currently underway are to be reviewed. The probable outcome is the private sector is destined for a rush of IT staff looking to jump ship. This, coupled with an immediate freeze on spending on new public sector IT projects above £1 million with existing projects in the pipeline for the last six months in jeopardy, begs the question, what could be the outcome?
Technology underpins the performance of all businesses; public or private. Technology provides businesses with processes, methodologies and technical platforms to perform better, faster, more effectively and more profitably. Reducing head count in public sector departments may be seen as an immediate cost saving, however this deficit can be countered by making the business more technically innovative as long as the technology is in place and allowed to do its job. Cutting both man power and technology will have lasting effects.
What of the outcome? Certainly talented public sector IT staff will migrate to the private sector, if the sector can accommodate them. Certain skill sets may disappear from the arena completely, as is currently happening with the mainframe market, where technologists are retiring with no-one in line to replace them. Reducing funding to British Universities and cutting the number of graduates yearly may cause a drought in the talent pool. That’s just for starters.
Technology changes at such an alarming rate that applications and hardware get smaller, faster and cheaper. In 1965, the co-founder of Intel, Gordon E, Moore stated: “The computing power of a microprocessor will double every 18 months.” This became known as Moore’s Law. To date, this has been the case, providing us with cheaper, faster computers at an amazing pace. Now add to this hypothesises that the price of technology halves every 12 months and one can see that very soon, the public sector could be falling behind the technology trail.
With this in mind, and the public sector slashing budgets, putting crucial IT projects on hold, this will surely have an effect on the way the public sector operates and competes. With the reducing of head count and the freezing of salaries, coupled with the eventuality that key IT staff may make the leap of faith to the private sector, within the next six months, the offices of Government could be 18 months behind the technical curve and heading for an information technology ice age. Remember what happened to the dinosaurs!
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