The public sector is under tight budget constraints, and there are pressures to find new cost effective and innovative ways to deliver services. As a result, private and third sector involvement in delivering public services is expected to grow and move into new areas, especially as the coalition government has openly stated its commitment to using markets, choice and competition to drive public service reform.
The outsourcing market will become increasingly diverse. The ICT-only outsourcing market is mature, and the focus will shift from back office infrastructure programmes to frontline service delivery, increasing the range of potential suppliers to government. The changing public service landscape will give rise to a new set of opportunities and threats to ICT suppliers. On the positive side, there are areas of growth for suppliers to target which, given the current spending constraints, is valuable. However, it also intensifies the competitive landscape as public service delivery specialists are moving into the market space that ICT service providers would prefer to occupy. The purpose of this report is to evaluate the current size of outsourcing opportunities, key drivers and suppliers, and provide a five year outlook on the future direction of travel.
Introduction and Landscape
Kable's 2011 BPO report highlights key contract wins and changes throughout the year. It also highlights the big players in each public sector vertical.
Key Features and Benefits
The focus of this report is on outsourcing opportunities that include a significant ICT element. These range from the traditional outsourcing or management of the ICT infrastructure, where technology is at the core of the contract, to BPO agreements, where those processes require a significant investment in ICT to support delivery.
Naturally, there are a large number of support services, such as facilities management, that do not involve a significant ICT element. These types of outsources fall outside of the scope of this report, but are included within Kable's wider UK Public Sector Outsourcing - The Big Picture publication, which looks beyond the use of ICT in the UK public sector to examine the broad range of services that are commissioned by public sector bodies.
For the purpose of this report, we regard outsourcing as including the following:
- ICT-intensive BPO: the transfer of a public sector business process and function to the private sector, often involving the transfer of people and/or assets, and using ICT to support delivery;
- ICT outsourcing: the transfer of the ICT function from the public to the private sector, often involving the transfer of people and/or assets;
- communications outsourcing: the transfer of the voice and/or data communications infrastructure from the private to the public sector;
- managed service: the private sector is contracted to manage part of a service on behalf of the public sector, for example application hosting, web hosting and desktop management.
Key Market Issues
- Gain insight into the public sector ICT BPO market in the UK.
- Gain knowledge on the developments in the UK ICT BPO market over a five year period to 2015.
- Provides you forecasts for ICT BPO spending split by vertical.
- Highlights key contract wins and changes.
- Highlights the big players in each public sector vertical.
Growth in outsourcing is expected to return as the government's reform agenda takes hold, and rhetoric around greater private sector involvement in the delivery of public services becomes a reality. However, the type, pace and degree of change varies between sectors, and this will shape the level of
outsourcing opportunities going forward.
Suppliers that have built up a strong position from traditional growth markets will need to re-assess their strategies and focus. The coalition has made it clear that it does not view 'big bang' transformation programmes as the best approach to leveraging ICT to achieving its objectives; and competitive dynamics will change as the emphasis shifts from traditional ICT outsourcing to the purchasing of end-to-end business processes to support the delivery of public services. SHOW LESS READ MORE >
1 Executive summary
2.1 Scope and structure
3 Market sizing and forecast
3.1 Market sizing
3.2 Market forecast
3.3 Contract renewals
3.4 Types of outsourcing
3.4.1 ICT outsourcing
3.4.2 Business process outsourcing
3.4.3 Managed communications services
4 Sector profiles
4.1 Central government
4.2 Local government
4.5 Criminal justice
5 Supplier landscape
5.4 Fujitsu Services
5.8 Atos Origin
List of Figures
Figure 1: Outsourcing spend by category
Figure 2: Outsourcing spend by sector
Figure 3: Outsourcing spend forecast by category, 2010-11 to 2015-16
Figure 4: Outsourcing spend forecast by sector, 2010-11 to 2015-16
Figure 5: ICT outsourcing forecast, 2010-11 to 2015-16
Figure 6: Business process outsourcing forecast, 2010-11 to 2015-16
Figure 7: Managed communications forecast, 2010-11 to 2015-16
Figure 8: Central government total outsourcing expenditure and forecast to 2015-2016
Figure 9: Central government outsourcing expenditure by contract type
Figure 10: Largest outsourcers in central government
Figure 11: Key contracts and lead suppliers
Figure 12: Main outsourcing contracts in the devolved governments
Figure 13: Local government total outsourcing expenditure and forecast to 2015-2016
Figure 14: Local government ICT outsourcing expenditure and forecast to 2015-2016
Figure 15: Business process outsourcing in local government, 2010-11
Figure 16: Recent contracts awards adopting risk-reward and payment by results models
Figure 17: Examples of contract awards with commitment to create jobs in the local area
Figure 18: Health total outsourcing expenditure and forecast to 2015-2016
Figure 19: Examples of suppliers positioning themselves to provide support services to GP consortia
Figure 20: Main outsourcing contracts in the devolved regions
Figure 21: Education total outsourcing expenditure and forecast to 2015-2016
Figure 22: Recent BSF contract awards
Figure 23: Recent ICT outsourcing contract awards
Figure 24: Criminal justice total outsourcing expenditure and forecast to 2015-2016
Figure 25: Examples of outsourcing by individual forces
Figure 26: Examples of back office collaboration and mergers
Figure 27: Defence total outsourcing expenditure and forecast to 2015-2016
Figure 28: Key defence contracts
Figure 29: Transport total outsourcing expenditure and forecast to 2015-2016
Figure 30: Top 10 public sector outsourcing suppliers
- Atos Healthcare
- Atos Origin
- Boeing Defence UK
- European Electronique
- Fujitsu Services
- Global Crossing
- Josko Solutions
- Level 3
- Mass Consultants
- Siemens ICT Soliutions and Services
- Tata Consultancy Services
- Tribune Business Systems
- United Health
- Virgin Media