Shared services and offshoring ‘will transform’ Whitehall

Government operations will be transformed by the rollout of shared services and the controversial expansion of offshoring over the next 10 years.

That is the prediction of analyst house TechMarketView, which suggested there is likely to be less enthusiasm in Whitehall for embarking on large IT projects.

Budget cuts were going to force many elements of the public sector to “challenge the way they currently do things”, according to Tola Sargeant, research director. While some departments would turn financial pressure into an opportunity to effect innovation, others would drag their heels and “be forced to make changes”.

Even though shared services have for long been mooted in the government, not much has happened. But the extent of the budget cuts will force the public sector to overcome any political or cultural barriers to its adoption, she said.

“Shared services will finally gather momentum, particularly in the back office, as government organisations realise there is no alternative if they are to achieve such substantial cost reductions,” Sargeant explained.

Local government would lead the way, with notable shared services take-up from 2012. This would be followed by health, social care, education and various police authorities.

But Sargeant was sceptical about the much-hyped government cloud, or G-Cloud. It would eventually bring benefits, she said, but progress would be “frustratingly slow” as it is met by cultural and political barriers.

Cost benefits would encourage the use of greener IT and promote virtualisation, she said.

Offshoring will grow in the next 10 years as the government works to cut costs and boost efficiency. Sargeant said the practice would “gradually become more acceptable”, and by 2020 companies such as Tata Consultancy Services, HCL and Wipro would appear among the top 20 suppliers.

Vast IT schemes, similar in scale to the £12.7 billion NHS National Programme and the £7.1 billion Ministry of Defence DII programme, were less likely to be launched as the government seeks to take on fewer costs and less risk, she said.

“Increasingly seen as high-risk and potentially high cost, large high-profile IT programmes will tend to be broken into smaller chunks or let locally to a range of suppliers using nationally agreed frameworks.”

This will pave the way for greater use of open standards and standards-based frameworks, particularly in health and social care, Sargeant said. But while she predicted open source software would gain popularity in education, she said it could largely remain a “bargaining tool” in supplier negotiations in other areas of the public sector.

Transactional services for citizens would all be offered online by the end of the decade, Sargeant said, in a move that will require heavy investment from local and central authorities.

There would also be pressure to personalise services for citizens and offer more web communication. “Generations who can’t live without social networking sites, You Tube and iPhones will demand more online interaction with public sector organisations – from their GP to their children’s school - and greater transparency than ever before.”

Copyright © 2009 IDG Communications, Inc.

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