Outsourcing – advice to Councillors and those in other governance roles

The UK’s local authorities (councils), police forces and other public bodies are showing an unprecedented interest in outsourcing. There have been high profile outsourcing decisions or events in councils including Somerset, Cornwall, Barnet and elsewhere, with the interest certain to continue into 2013 as councils struggle to maintain services in the light of funding shortfalls.

Over the holiday period, the Chief  Executive of Cornwall, Kevin Lavery, announced he was leaving, just as their councillors have to make a tricky decision about outsourcing – this follows a period during which he was a strong advocate of a very significant, wide-scale outsourcing / partnership with BT.

Councillors themselves have to make difficult decisions without always having the right skills or very good information to support the decision. Some individuals no doubt have relevant experience, but for others, complex issues and decisions around outsourcing must take them well outside their areas of experience, knowledge and comfort. We really don’t envy them.

And we’re not against outsourcing in any sense here; every organisation outsources something, and it is a vital tool for pretty much any and every organisation today.  But for people in a governance or decision making role in public bodies, or with the ability to influence decisions, we’d suggest they should consider these four contextual points.

1.    Remember that your potential and actual suppliers are inevitably motivated by short and long term profit motives. Nothing wrong with that, but never forget it. That’s at both corporate and individual level. The sales people you deal with may be heavily incentivised, and the bonus for closing the deal with you may be more than most of your staff earn in a year. Respect their views, but never forget what motivates them and their firms. Whatever they tell you, they are not your “friends”, and whilst they generally do want you to succeed, that is because it will best serve their own interests.

2.    Remember that the executives within your organisation, who may be promoting a current outsourcing initiative, may not be around to see it up and running (as in the case of Mr Lavery). They may have great loyalty to your organisation and plan to see out their careers with you – or they might not. They may not even be here next year or next month. Respect their views but remember they have their own interests, may go their own way, and might leave whatever they have promoted or created to someone else to implement or rescue.

3.    Remember that you may not be around in a few years time. Wanting to leave a legacy is understandable. But realise that someone else may have to pick up the pieces if you make mistakes now. That shouldn’t’ t mean your decision making can be cavalier; think about how you want your actions and decisions to be remembered in the future, and how you want your successors to talk about you when you’re no longer around.

4.     Remember that the financial situation of your organisation may be very different in the future. There is no guarantee that income is going to grow again in real terms – perhaps ever. Service requirements and priorities will also inevitably change. So any significant contractual arrangements you enter should be flexible enough to cope with this. Don’t get locked in to unaffordable costs or inflexible service definitions.

And good luck.

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