Digital transformation and investment in technology dominates local government outsourcing strategies in 2016
Local authorities across the UK increased their investment in technology in 2016, with council spend on outsourced IT reaching £463 million – a 75 per cent year-on-year increase - according to the Arvato UK Outsourcing Index.
The findings revealed that the boost in IT spend contributed to an eight per cent year-on-year rise in the overall local government outsourcing market in 2016, with contracts signed worth £814 million.
The Index, compiled by business process outsourcing (BPO) provider Arvato and industry analyst NelsonHall, also recorded a 45 per cent increase in the number of deals procured by local authorities (20 to 29) in 2016, compared with the previous 12 months.
The research partners say there has been a shift away from the traditional large, multi-process contracts towards procuring smaller, more focused deals. The latest findings show the average value of agreements signed by councils in 2016 fell by 25 per cent year-on-year, with contract lengths falling by six months on average over the period.
The proportion of new work coming into the sector reached 72 per cent or contracts last year from 60 per cent in 2015, with councils focusing procurement on new data centres, end user computing and network and application management.
Debra Maxwell, commented: “The sustained growth we’re witnessing across the sector reflects the growing pressures on local authorities to transform their operations, cutting costs while providing better services for citizens.”
“While technology is already playing a key role through the digital by default agenda, investments in new innovations, such as automation and cognitive systems, are now set to underpin more fundamental change.”
The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm Nelson Hall, in partnership with Arvato UK. The research is based on an analysis of all outsourcing contracts procured in the local government sector during 2016.
Overall, UK outsourcing contracts worth £6.2 billion last year, with 58 per cent of spend coming from the private sector and government accounting for 42 per cent.