Outsourcing tips from the public sector
Corporates could learn a lot from the public sector about how to manage outsourcing, according to a paper published by the CFO of IT services company Steria.
CFO Davinder Ahluwalia says that his work with the UK government has shown him how years of public scrutiny have turned state departments into innovative outsourcers.
The public sector is more likely to focus on the relationship rather than the contract, to be flexible throughout a programme, to engage in open book accounting and to use shared risk and reward structures.
?For years there has been something of an ongoing prejudice that the public sector is not as quick to adopt new working practices as the private. In truth, the public sector is often more advanced,? says Ahluwalia.
?The public sector has had no choice. Accountability has always been one of the highest priorities when it comes to the spending of public funds. But as the private sector develops a similar dependency on external service provider relationships, it's finding that it, too, needs to ensure the same high levels of accountability and transparency.?
Ahluwalia recommends that corporates should work on principles of openness and flexibility with their outsourcing partners before contracts are even discussed, should set payment levels for specific results, and should have access to service delivery costs to build up trust with the supplier.