Government HR and back-office functions could be outsourced within two years, if the Conservatives win the next general election.
Francis Maude, shadow cabinet office minister, told Personnel Today if the Tories came to power, they would pursue outsourcing over the current government’s shared services programme, as a better way of making essential efficiency savings.
In April’s Budget, chancellor Alistair Darling said he would seek to claw back £15bn of costs from back-office functions by 2013-14, by speeding up the introduction of shared services.
While industry experts have forecast that both internal shared services and outsourcing would achieve up to 30% efficiencies in headcount reduction, putting about 6,000 HR jobs at risk, Maude said he favoured outsourcing because it was often quicker to implement and would prevent departments squabbling over ‘turf wars’ about who led the shared projects.
“If shared services are started and run in-house, you will always have turf difficulties over who will run it,” he told Personnel Today. “But if functions are outsourced, the turf difficulties get removed and you are more likely to have a better outcome in terms of getting more for less.”
Referring to a shared services project run by the Department for Transport that cost the department nearly £30m more than predicted, Maude added: “It’s not obvious that [shared services] are the answer. We are ready to outsource.”
The HR director at the Department for Environment, Food and Rural Affairs (Defra) also recently admitted Whitehall’s move to shared services could take at least two years, based on how long it took the department to implement the scheme. Outsourcing providers, however, have said outsourcing projects on a similar scale could take about half that time.
Bob Scott, vice-president and head of public sector outsourcing at Capgemini, said outsourced back-office functions could be set up within a year of the Tories coming to power. The next general election is now less than a year away. “There’s a lot of public sector back office that’s still done in-house and could benefit from outsourcing to drive efficiencies,” he said.
But Mike Emmott, employee relations adviser at the Chartered Institute for Personnel and Development, was unconvinced about the benefits of outsourcing public sector functions, and said the government’s “direction of travel” towards shared services was the right move.
“I would be sceptical as to whether outsourcing adds anything extra in terms of efficiencies compared to streamlining functions and shared processes,” he said. “There is plenty of evidence that outsourcing actually disappoints in savings.”
Maude said it was too early to say which departments would be affected as it would be up to departmental ministers to decide whether to outsource, but he warned there would be “a lot of pressure from the centre” to control costs.