Outsourcing popular internationally
- By Michael Hardy
- May 16, 2003
Download the Accenture study or executive summary here
Outsourcing is an increasingly popular practice for governments around the world, according to a new study by Accenture.
The study examined 22 countries, including the United States, and found that while almost all of them are increasing their outsourcing activities, their definitions of outsourcing and the areas they are most likely to outsource vary widely.
For example, the U.S. government tends to define outsourcing as any job that a private-sector firm takes over from the government's workforce.
Some agencies also include new work that was never done by government employees. In the United Kingdom and Australia, government agencies use the term "outsourcing" when the private sector takes over a process or function, but not as often for short-term projects.
The study found that governments outsource to add value to their operations rather than to lower costs. Among the countries studied, 88 of the government officials who responded cited cost reduction as a reason, making it the seventh-ranked objective. Improving service speed or quality, gaining access to expertise and gaining access to new technology were the top three reasons cited.
Information technology applications comprised the most common area to be outsourced, with IT infrastructure and Web site design ranking second and third. Outsourcing of business processes, including human resources, supply chain management and training, is still relatively rare, Accenture found.
The study's findings are consistent with the observations of other groups. Alan Chvotkin, senior vice president at the Professional Services Council, identified several reasons that the U.S. government, and governments in general, would outsource.
"The government is trying to keep up with the rapid pace of technology, and a better way to do that is to acquire it, to have a vendor responsible for upgrades," he said. "The second is budget constraints. The third is workforce capabilities. The highly trained competent federal workforce, there are fewer and fewer of them, for various reasons."