19 Dec 2007 - Marriage or Divorce - the ICT Outsourcing Relationship with Local Government

In a climate where outsourcing has been seen as an opportunity to make cashable savings; in a time of shrinking budgets; are local authorities turning away from the traditional ICT partnership models? Marriage or Divorce, that is a key question.

Blackburn with Darwen is the latest local authority to return their ICT provision in-house.  The council has brought the technology service back into the fold, ending their contract with Capita (worth £2.4m per year).  Staff are transferring back into the Council as a part of “a strategic decision After 5 years of experimenting with ICT outsourcing, the decision has been made to keep it in the family.

What is interesting is this tidal change is happening only a week after Serco signed a key partnership contract with Glasgow City Council. The 10 year ICT outsource contract (worth £273.5m) is aiming for a 20% efficiency gain. This is a move in the opposite direction. A partnership with even greater risk and revenues at play, suggests the outsourcing strategy may still have legs.

However, with fewer strategic partnerships coming out to market, it seems that local government attitudes are changing.  There are numerous solutions to try to deliver better value services: local area agreement partnerships, shared services, traded exchange, and of course organisational transformation.  Not one of these is the golden bullet, but the ongoing quest for efficiency and effectivity gains lies in going in with one’s eyes open. The choice can lead to a 5 - 10 year marriage where just like in life, the separation can be expensive and an emotional experience. But like in marriage, partnerships can also deliver great rewards. It is essential that organisations from both sides know what saying “I do” means to them.