Local government expert Tony Travers has predicted that the recession will lead to much more outsourcing, in some cases involving all services provided by organisations. "There will be a major move to outsource services to save money," the director of the LSE London research centre told the Society of IT Management's national …
Can't see how it will save money
The outsource companies will have to provide the same services and make a profit.
So they spend less money on staff & resources.
Less gets done, the staff get pissed off with lower pages.
Eventually the councils have to spend more money than they otehrwise would to get things back to the level of service that was provided before.
The councils do not have to make a profit, so they will always be able to provide the same level of service at a lower cost that some external supplier that has to do the same and make a profit on top.
>> If attempts by some councils to outsource large parts of their functions succeed, "almost every authority in the country will be inexorably pulled" towards this model, he said.
Outsource, succeed? Not two words that you see used in the same sentence very often. Personally, I would have wrote it as :
Even when attempts by some councils to outsource large parts of their functions fail, "almost every authority in the country will be inexorably pulled" towards this model.
BTW, I love that highly selective quoting thing you do, it allows all sorts, e.g.:
If Robbie Coltrane visits Birmingham "almost every authority in the country will be inexorably pulled" towards the midlands, due to Robbie's immense mass, he said.
Here are a few ideas to save stacks of cash and no consultancy fee!
Unitary authorities, do we really need district, county councils, yes they do different things but they could be morphed into a single per county authority.
Centralised Council Tax collection, why replicated in every council?
Planning, office hubs for their planners to do their work and have biscuits and coffee. But the processing of plans etc. could be centralised.
Benefits, centralise it. Why does it need to be in every council? No need to drop in, cant afford a phone to call the call centre, then get a job until you can or use a payphone.
Thats for starters, the public sector needs to work more like a private sector company, you wont find a single private sector company that has a finance dept in every office for example.
Appreciate that it keeps a lot of pin money women and men in a job but lets be honest, having seen it first hand; Before 10am and passed 3pm most people have "disappeared" to pick up/drop off their kids whilst faking their flexi-time sheets. While 35 days a year holiday is pretty staggering, yep it goes up the longer you work there!
So why should I be paying for these perks??
Some still think that outsourcing saves money? Oh great, we're all fucked then.
Maybe if you need a new department, or new task doing, but replacing experienced people with cheap indians in the misguided attempt to save a few quid will take our councils down fast than any recession will.
Outsourcing to save money is a joke...
I work for an outsourced section of a local council (but not for long, I've got a new job :D ).
I can safely say that outsourcing to save money is a joke. If something is done in house, it's done. If you need to do something else, you just make your employees work harder. If it's outsourced, the outsource company do what they're contracted to, and if you need anything else, they charge you a shedload more, or make you do it yourself.
The only people who win are the shareholders of the outsourcing company...
And when it comes to the next round of cuts...
You can't make any cuts to the outsourced service, because its a fixed price contract, so you have to renegotiate a new cheaper contract, which inevitably means accepting truly appalling levels of service and technical provision.
Try, for example, downloading a typicaly bloated WIndows roaming profile over a WAN link with 30ms latency over a crow flies distance of about 12 miles he said with some bitterness...
Makes so little sense when there are 2 million unemployed, but it's a damning sign of British employment law.
Outsourcing safes money?
Nope - in experience the quality of work we get back from our offshore partners is generally poor. - delivered to the vague requirements that we originally had.
In reflection - we've lost our pool of talent to deliver and therefore its going to cost a whole lot more to deliver what the customer wants.
I can see that nobody complaining has ever worked in the public sector.
I have, but never again will I work in the public sector for any reason short of avoiding bankruptcy. The staff are with the odd exception lazy and incompetent to a degree that would get you sacked in a business. There are no bonuses and there is no penalty for failure to do your job, even if your are incompetent to a level that should preclude you from doing the job. This is why people die in the NHS.
People KNOW there is a problem with what someone is doing but if you go to the HR department the most that can happen is that person will get an improvement plan for ~9 months after which the situation will be reviewed. If they fail to learn, no problem! Just lower their targets to something they can achieve. (1+1 = ?)
As a result of their being no reason to work hard (or at all) people do the absolute minimum they can get away with, and that's pretty dammed small. The actual work output of the majority of staff is on average about 30% - 50% of what you'd reasonably expect from a reasonably well run business, hence why the government see outsourcing to business an answer to problems because they CAN do a better job with a third to half the staff and still make a huge profit while delivering a better service.
Hence why outsourcing is always talked about. Its not worth it if your a business, because your staff already perform at a reasonable level but for government? Oh yeah.
Two sides to a story
I can see by the posts that these are people that have had bad experiences.
Actually these are the people that have tried outsouring and because they did it to save money and not to be more efficient, they chose the cheapest of the outsourcing companies.
This is like deciding to eat ice-cream and then choosing the worst flavour. Not only that they then go and complain about it.
If outsourcing was such a bad move, larger companies would not be looking into it.
If outsourcing is done correctly by people that are well versed in doing outsourcing solutions then companies can benefit from it.
There are always two sides to the story.
Dont come and show how ignorant you are by putting comments up like you have.
Companies need to be more efficient and they need to be able to produce more,
My father always said "if you want something done, give it to a busy person" people that are in the outsourcing business have got a lot of work.
I guess this is why this market is growing at the moment.
My 200 Cents
I used to work in local authority in a fairly large department that provided IT services, I eventually left because most people I worked with were next to useless at everything and I was tired of treading water with them [mini rant - esp the 2 women in the team who seemed to get pay grade increases and commendation all the time despite being technically poor at their jobs and depending on sympathetic males in the team for constant advice / support / doing things for them - mini rant over]. Just before I left it was announced that the entire department was being outsourced along with all it's staff who were soon to find themselves working for a private sector company or have no job.
I didn't give a shit at the time because I was leaving anyway but in hindsight it was a pretty sweet deal for both parties. The private company received a ready made client base with long term contracts and the staff to provide services to it while the council lost the cost of having the staff and department which for local authorities, is very expensive. Seemed like a win - win situation to me when you look at it from a business perspective.
Personally I think IT services should be in house, with people who know the systems inside out. If 99.99% uptime is so important, as it seems to be the only thing management want to hear about, You can't substitute local knowledge on a large network for cheaper costs. Or is it all just bullshit because management don't understand the systems?
Outsourcing vs Offshoring..
Ok, yes Outsourcing *can* save money if done properly. Offshoring doesn't necessarily save you money and opens the door to a lot of potential risks.
The biggest problem is that those bean counters and CEOs who are making these decisions don't appreciate nor understand the difference and not until its too late do they realize their mistakes.
Dell for example offshored their tech support to India. Notice how they then split their business customers and product lines to US call centers and then the personal PCs were still handled by India? Gee I wonder why? I know I wasn't the only person asking to speak to an English speaking (American) supervisor, or sending me directly to L3 support.... ;-)
Outsourcing makes sense, but you have to evaluate it on a case by case level. Meaning it may make sense for company A, but for its competitor company B, it may not deliver any cost savings.
Offshoring has more problems than most think. Thanks to the BBC and El Reg, we've seen how Indian Staff could be bribed to provide customer's identity details. You won't know your identity was stolen until well after the fact and the individual who broke the law is in a different country and there are different laws and levels of enforcement. Bean counters don't grok the true risk nor do they care.
I think its time that people understand the potential, both good and bad, of outsourcing, sameshoring and offshoring.
An alien because I fail to see any intelligent life in the executive suite(s).
Outsourcing vs Offshoring..
Spot on, Gumby. And to run with your theme...
There's nothing wrong with outsourcing per se, it's just often badly handled by the people tendering the service. These people aren't the IT staff, because... well, turkeys don't vote for Christmas.
Result- badly scoped, poorly understood contracts. The standard services are delivered for less than your in-house folks did it, but all of the other stuff that SM didn't know about all gets done by the outsourcers at rates that are designed for super-profit.
What looks like a 20% saving on paper at the start of the financial year ends up as being a 15%-30% overspend at year end.
I've just renegotiated an outsourced support contract, bought it back in-house to a 250% performance improvement, and cut my IT support bill in half, so I can tell you it can be done.
And I work in the public sector :P
cause not effect
One word: bloat. Second word: councils. Too many of them, too many people in them, and too many people in them doing something completely inane, nothing, or 5/8ths of firk-all. Oh yes, and of course the gold-plated pensions on top of that.
There's the tendency to waste inordinate amounts of time on trivial matters, extortionate amounts of money of advisors, external consultants, and in particular projects that have no value whatsoever to the council or the rate payers. What new services do all these people deliver to the rate payers other than service themselves? (***)
Outsourcing works as long as its engaged for the right reasons, giving a win:win:win for customer, outsourcer and UK economy. IMHO, offshoring damages the UK economy, giving a win:win:lose ratio - not much good to the country / councils if the rate payers are out of a job.
***Paris, coz at least she knows servicing yourself doesn't make sense
Outsourcing proposals rarely factor in the cost of governance. Some unit in-house needs to monitor the outsourcer's performance, they after all are only trying to benefit their shareholders.
Inadequate governance means ripoffs or poor service.
And yes HP will give its Government customers access to English speaking tech support if pushed hard enough. Beats teaching the staff Hindi!
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