The UK public sector is spending almost twice as much as the private sector on outsourcing, claims new research.
Technology market research firm Information Services Group (ISG) carried out the study, finding that public outsourcing contracts topped £51bn over the past two years, while the private sector spent just £30bn.
According to ISG Partner Luke Mansell, the struggling economy and budget cuts have led to this “outsourcing boom.”
“The recession and the subsequent focus by the public sector on cost reduction and value for money has driven a renewed interest in outsourcing and its role in helping deliver efficient, cost-effective services,” Mansell claimed.
“While the commercial sector has moved to smaller contracts over the past two years, the public sector has seen a rise in mid-market contracts, mainly as a result of the complexity of the services required and the lack of appetite to utilise cheaper, offshore resources,” he added.
Tech and telecoms giants Capita, Telefonica and BT topped the public sector’s list of outsourcing deals, echoing research published last month that claimed tech firms bag more government spend than any other sector.
ISG claims that over the two-year period where it monitored outsourcing spend 585 public contracts were signed in comparison with 726 private sector deals – revealing public deals tend to be larger.
Mansell claims that despite the trend towards large public sector contracts, the next few years could see a rush of smaller contracts via procurement initiatives such as G-Cloud and efforts to increase government business with SMEs.