Local authorities in the UK are starting to find that the outsourcing contracts they signed are saddling them with more costs than they predicted.
Outsourcing was being touted as a way to save money, but it is starting to look like the councils are having to scale down outsourcing operations or abandon them completely. The current belief is now that a move to outsource can be a false economy. Councils are beginning to realise they are quite adept at making savings themselves.
This year Cornwall Council was awarded the right to divorce its outsourcing contract with BT. The council signed a 10-year £160m contract with BT two years ago,. However Cornwall was far from happy and wanted out. So BT sued to keep it in.
The eventual contract with BT was a slimmed down version of the original deal proposed in 2012, which was overturned after councillors put forward a no-confidence vote to the leader of Cornwall Council over the plans.
It was not the only one which is unhappy with its outsourcing contract. Earlier this month, Somerset voted to terminate its 10-year SouthWest One deal with IBM a year early, due to a report finding it had become “increasingly unaffordable”.
Now it seems that other councils are getting less keen about being saddled with outsourcing contracts. Dorset County Council has rejected plans to outsource its IT services, as it was unlikely to be sufficiently flexible in the future.
Looking at the numbers the council decided that it would not get value for money.
This means that outsourcing sales teams hoping to interest councils in big contracts next year will find it a tough sell.
