​​​​​​​Value of outsourcing contracts dramatically slows, analysis suggests  

3 Aug 18

The value of local government outsourcing contracts in the UK dropped considerably in the first half of this year compared to same period in 2017, analysis has revealed.

Local government buyers signed outsourcing deals worth £77m between January and June, compared to £136m in the same period in 2017 - a drop of 43% - according to research by outsourcing consultancy firm Arvato UK.

Although, councils appeared to be travelling in the opposite direction to the wider public sector, which upped its outsourcing investments, according to the company’s annual outsourcing index released on Tuesday.  

Public sector outsourcing spend increased in sharply from £720m in the first of 2017 to £998m in the same period in 2018 - despite Brexit uncertainty, Arvato found.

The total value of public sector spending was up 39% year-on-year, as central departments and councils focused on procuring agreements for IT and technology services.

The volume of public sector deals increased by almost 20% year-on-year, according to research by the business outsourcing company.

Debra Maxwell, chief executive, CRM Solutions, Arvato UK & Ireland, said: “The public sector market is showing signs of recovery as government organisations take the brakes off the tendering process.

“More than two thirds (68%) of contracts signed across the sector this year represent new relationships, showing outsourcing remains a key strategy for delivering new technologies, such as cyber security and automation, to drive efficiency and service improvements.”

Arvato said that central departments were the key drivers of government activity over the period and accounted for £921m of overall public sector spend - up 27% from £724m year-on-year.

In June, cabinet office minister David Lidington reaffirmed the government’s commitment to outsourcing.

In July, Barnet Council announced that it would reconsider it’s contracts with outsourcing giant Capita, over fears that they were not providing value for money.  

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