Achieving Optimal Potential in Government Shared Services / Outsourcing

With most governments of the world seeking significant efficiencies to help deal with the fall out of the global financial crisis – the placement of shared services and outsourcing arrangement within the government hierarchy has never been more important.

Whilst in most circumstances local accountability and knowledge are primary concerns – these pressing times dictate that government bodies structure their shared services or outsourcing arrangements in the most appropriate fashion to achieve efficiency savings – which after all is a requirement for all departments and areas of public service.

Whilst many bodies at a national, regional and local level have established various arrangements already – now is the time to review the situation to ensure that the optimal results are being obtained for the tax payer.

The benefits of aggregation, standardisation and simplification can yield high returns but placing services or partnership arrangements too low in the government hierarchy can lead to sub-optimisation and unnecessary duplication of effort (with the associated waste of resources) – especially in indirect areas like procurement, human resources and finance.
Whilst tax-payers are the final beneficiary of savings, the government bodies themselves can benefit from :

- A better utilisation of resources / fewer key people dependencies
- Access to a wider range of skills / pool of knowledge
- Improved management information
- Greater purchasing leverage
- Access to wider range of national / international suppliers
- Reduced Risk
- Improved leverage of investment
- Access to Best Practice processes

Also achieving optimal efficiency within an internal shared service facility means any future outsourcing arrangement with a commercial body will not unnecessarily leave the tax-payers money on the table as easy pickings.

This is not just a matter of placement of services in a hierarchy however. Arbitrage opportunities should also be considered. With appropriate skills being available across a wide range of geographies, government bodies at all levels could benefit from tapping into more cost effective resource perhaps outside their normal catchment areas for employees. One of the unfortunate side effects of the economic downturn is the shedding of highly skilled workers by commercial organisations - Such skills may have the potential to bring a higher return per employee if the pockets of talent are appropriately exploited by government bodies at the right level. With communications costs being so low and tele-presence technology being so pervasive today, geography is no longer the issue it used to be.

These are just a few suggestions, that if exploited, have the potential to deliver a much more cost effective support basis for government bodies at all levels.

I would welcome your views and experiences.