Local government outsourcing hits five quarter high

The local government sector accounted for 24 per cent of spend on outsourcing. The research discovered that the total value of UK outsourcing deals signed in the first quarter of 2015 dropped 42 per cent year-on-year to £1.48 billion, with outsourcing provider arvato claiming that pre-election uncertainty was the likely cause.

The £350 million spent on local government outsourcing deals in the first quarter of 2015 represented an eight per cent increase, showing that despite a subdued start to the year for the overall UK outsourcing market, local authorities outsourcing remained prominent.
 
Average contract lengths in local government increased by 70 per cent, from 58 months to 99 months, further signalling the sector’s belief in outsourcing as a proven strategy for tackling its challenges. According to the research, authorities largely procured multi-process BPO contracts focussed on HR, finance and ICT, together with asset and building management, signalling the ongoing trend for forming larger, integrated outsourcing relationships.

Debra Maxwell, managing director of arvato UK, commented: “There are some very positive signs for the sector’s health to be found in the high proportion of first time deals and onshore work. The continued growth in the local government sector is yet more evidence of local authorities’ commitment to outsourcing as a viable strategy to enable the transformation and efficiency savings needed to tackle the ongoing budget challenges they are facing.”

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