INDUSTRIES
Like private companies, governments outsource their non-core functions to third-party service providers to optimize their operations. According to the Organisation for Economic Co-operation and Development (OECD), its member countries spend an average of 8.8 percent of their GDP on outsourced services. These services are either used by the governments directly, such as maintenance of government IT systems, or provided to citizens, such as health care and education, while the government retains core services such as tax collection and law enforcement.
Government outsourcing case studies
Outsourcing at the national, state, and municipal levels can be a powerful tool to improve performance, drive innovation, and leverage advanced technologies. According to a study by the City of Colorado Springs Sustainable Funding Committee, many cities across the US have successfully used an outsourcing model to reduce costs, regain focus on core activities, increase revenues, and improve the quality of services. The following case studies illustrate how a carefully executed outsourcing campaign can help organizations achieve high performance:
Internal administration services
In 2001, the city of New York, NY partially outsourced its 311 municipal call center, which employed about 1,000 employees. Then Mayor Michael Bloomberg led the reorganization of the call centers by outsourcing part of the operations to third parties during peak periods.
Contract-based customer service workers helped callers with their concerns and a translation services company handled foreign-language calls. By outsourcing contract-based call center employees, the city reduced costs during peak periods and provided quality services to non-English speaking residents.
Information technology services
The government of South Australia first outsourced its mainframe computing platform in 1994 as part of a strategy to reduce costs, improve IT efficiency, reduce complexity, and achieve economies of scale. The long-term outsourcing program is still ongoing as of 2019, reducing application response times by 97 percent, improving productivity and service quality. The state also avoided a $3.1 million capital expense by upgrading the mainframe environment through the outsourcing agreement.
Commonly outsourced services in the public sector include:
Back-office support. Non-core back-office services and support are the most commonly outsourced functions in local and central governments. Private enterprises help government agencies reduce costs and boost efficiency with mail room services, translation, data processing, data entry, loan and fund administration, procurement, registration, and accreditation.
Customer care. Another top outsourced function is customer support. Third parties provide call center support and tech support to government news and information agencies, legal departments, and other public entities.
Finance and accounting. Just like private organizations, public agencies outsource general accounting, payroll, and other finance services to third parties.
Human resources. Third parties provide complete HR and payroll solutions for government agencies. This can be in the form of recruitment consulting specialists, payroll administrative staff, or an employee training program.
Information technology. Government agencies looking to improve service quality and reduce costs partner with experienced IT providers for process reengineering, upgrades, infrastructure, and cloud services.
Offshore government outsourcing
Governments must decide whether to outsource services locally or offshore. Contracts that are heavily regulated and require stringent data security are often kept in-house or outsourced to local providers. Services like web and app development, IT and infrastructure, contact support, and data management can be outsourced to preferred offshore outsourcing destinations like the Philippines and experienced service providers such as Sourcefit.
Please contact us to find out about Sourcefit’s custom public sector solutions.
