Is outsourcing falling from favour?
The Guardian is running an article on how outsourcing vital services is becoming less appealing for local authorities in the UK. It cites a report that suggests one reason a flood recovery operation was a success last year was that previously the local council had decided to take the service back in house after outsourcing it before that.
It also quotes examples such as Cumbria, which re-insourced its operations in 2011 after an outsourcing contract with Capita failed to deliver the savings targeted. In fact the paper has surveyed 36 contracts signed in the mid-to-late 2000s and found that 13 of them have subsequently gone back in house.
It also cites a forthcoming report from the ESSU that suggests over 25% of outsourcing arrangements in the public sector have failed to deliver. This is, for us, where the logic appears to start failing; any report that says just over a quarter of projects have failed must by extension be saying that almost three quarters have been a success.
By many measures this isn’t a particularly spectacular hit rate. However, for a model that was just being introduced and was unproven, and which is only now maturing and beginning to understand the flexibilities and tolerances needed to make a contract viable for the longer term, it doesn’t look a bad start to us.
And we applaud the Conservative councillor in Cumbria who took things back in house for practical rather than ideological reasons: if everyone took such a pragmatic rather than dogmatic view, we suspect the whole of the sourcing industry would be in better shape.