Public sector playing outsourcing catch up

The UK is ahead of the rest of Europe when it comes to outsourcing but the public sector is still blinkered by a pure cost driven approach, according to new research.

The survey of 1,000 IT directors, CFOs and senior business managers in 14 countries across Europe was carried out by IDC and sponsored by Xerox.

The figures support recent predictions on the growth of business process outsourcing (BPO) with almost 60 per cent of organisations currently outsourcing or planning to outsource some business processes. Over half said BPO is now an accepted business practice.

But the trend is not across the board, with the public sector still favouring a more traditional approach to IT outsourcing driven by the need to save money, rather than BPO, according to the research.

Chris Bunce, business development manager at Xerox, said businesses, and especially the financial services sector, are focusing on the revenue generation and process improvement opportunities offered by business process outsourcing (BPO).

"The public sector's interpretation of outsourcing is different to others. People are re-evaluating what outsourcing is. The cost argument has gone," he said. "In the corporate sector it is about productivity and competitive advantage and people are looking for experts to take over whole business processes rather than discrete IT functions."

He said vendors bidding for business take very different approaches to the public and private sector, with the cost-down approach the biggest priority for government IT directors.

Earlier this week analyst house Gartner coined the phrase 'business process fusion' to describe how organisations should focus on technologies and strategies that create revenue opportunities and allow for the re-engineering of business processes.