The UK and Beyond: Will World Government Financial Messes Lead to Increased Outsourcing?

The UK government, like those within the EU and the US, is in a dire financial situation brought on by a combination of deficit spending, stimulus investment and just plain waste. Faced with the potential for overall credit downgrades -- which will increase borrowing and debt service costs -- more is on the lines, in many cases, than ever before. But will the UK and others go so far as to consider outsourcing -- or even potentially off-shoring -- capabilities to save money at the expense of keeping public sector workers employed? A recent article I came across suggests that outsourcing is clearly on the Spend Management table in the UK even in critical areas such as defense communications.

In it, the authors suggest, "the UK Government could be set to invest more in external private companies for tech projects." The architect of one of the current programs is quoted in the article and makes the simple yet profound statement -- especially coming from a public sector official -- that "A purchasing contract can be as effective a way to get money to an innovative small business as a grant or a capital investment: this is particularly important at times when banks are so reluctant to lend." In other words, the outsourcing of capabilities might have an even greater effect on the overall economy and future economy of a country than simply reducing costs. This is even true in the case of using offshore, or "foreign resources," as well, the UK official claims.

In my view, the more we teach governments -- not just procurement and contracting teams that are on the front lines of public sector procurement, but actual elected officials and civil servants -- about the power of buying a service or capability versus in-sourcing and creating a new government job, the faster we'll climb out of recession by cutting government spending and government debt, creating new private sector jobs and encouraging the type of innovation that the private sector can bring. Granted, given the vested powers of many unions within the UK, the US and beyond, such a policy shift may take time to put into effect. Yet tough times require tough responses. If the status contracting and spending quo has the potential to lead to the potential economic downfall of nations, isn't it time we got creative?

Jason Busch

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