Debra Maxwell, CEO at ArvatoConnect considers why outsourcing must be part of the UK government’s strategy if it is to achieve its promised productivity gains.
When Rachel Reeves stood up in parliament to deliver her debut budget, she made one thing clear – driving government efficiency and cutting wasteful spending is a top priority.
She initially set a 2% productivity, efficiency and savings target that all government departments must meet during 2025.
In a short space of time this number has shifted significantly, presumably as the task of balancing the books has become progressively more challenging – with reports now suggesting that 11% is needed.
But details on how this can be achieved are light, beyond talk of “using technology more effectively and joining up services across government”.
Shifting perceptions
It’s true that, for some, outsourcing has had mixed reviews. But there are many uncelebrated success stories delivered by outsourcing, with some contracts already achieving savings well above the 11%.
Also, this isn’t just about achieving the savings, but doing so at pace. It’s all well and good setting an ambitious target, but if it is going to take years to come to fruition this defeats the object. With the pace of change today, any solution that takes too long to implement is likely to be outdated before it’s even been deployed.
Staying ahead of the curve
Consumer expectations are evolving fast and organisations must keep pace.
AI and digital self-service are key to improving customer experience – driving both quality and cost efficiency
But while the private sector is making rapid strides in efficiency and innovation, public sector delivery is still patchy and often behind the curve.
That gap won’t close unless government departments stop treating outsourcing as a service delivery arm and start recognising it as a strategic necessity to support the government’s aims.
Outsourcing to private-sector partners offers the agility needed for digital transformation – scaling operations up or down based on demand, bringing in expertise of ‘seen that, done that’ by drawing on companies who also have private sector experience. It creates a future-proofed, flexible model that can be implemented in manageable steps.
Taxpayer value remains paramount, but simplifying the procurement and bidding process for outsourcing could unlock even greater efficiencies. Challenges around data access and legislation still exist, but the new government has signalled its intent to tackle these head-on.
Then there is the thorny subject of where the greatest opportunity for savings lies. Often the scope is to automate low skill, repetitive tasks but there are huge opportunities to reduce middle tier tasks and significantly reduce costs, but often the key stakeholders sit in that middle tier.
By bringing an independent 3rd party to the table, departments can get a far more objective and realistic view of the opportunities, and our experience suggests the gains could easily exceed the 11% efficiency target.
Achieving Efficiency
ArvatoConnect has spent over 15 years working with government bodies such as HMRC, the Department for Education and the Department for Transport, as well as local authorities and private sector clients, delivering significant cost savings and operational efficiencies
We also support Crown Commercial Services (CCS), which works to help the UK public sector get better value for money when buying products and services.
Our recent work with the Financial Viability Risk Assessment (FVRA) process illustrates this perfectly. Utilising our team’s operational knowledge, we were able to identify processes which, by using AI, has significantly improved both operational efficiency and assessment quality. The system was up and running within three weeks and the benefits were being realised only two weeks later.
Equally, we recently extended our contract with Dudley Council, successfully migrating data from a legacy system in just two weeks. This meant that the Council was able to make significant savings on software licenses which were no longer required, resulting in significant annual savings. Work has also been extended to help automate scheduled tasks within their Housing and Revenues & Benefits systems, reducing staff workloads and improving overall efficiency.
These successes not only highlight how technology and operational improvements can generate incremental savings, but also crucially doing this at pace, as true step-change efficiency gains require specialist knowledge, cutting-edge solutions and the ability to rapidly scale. These are all capabilities that outsourcing partners bring to the table.
Looking ahead, the Chancellor is right to consider how technology can drive efficiency savings, taking a page from the private sector’s playbook of innovation and digital transformation. For all the talk of efficiency drives, one truth remains: substantial, game-changing savings will struggle to come from within.
If the government truly want to transform public services and achieve its new 11% efficiency target, then outsourcing isn’t just an option – it’s the way to make those ambitions a reality in weeks not years.
