The process of identifying potential public sector cuts has now begun in earnest. One area, however, seems curiously under-discussed - as yet.
Outsourcing has traditionally been seen as a way to move costs, particularly labour costs, off the public books. Indeed, its popularity as a way of cost-cutting may have led to the present lack of discussion of outsourcing at the moment; there may be something of an assumption that everything that can easily be outsourced already has been.
That's not the view, though, of management consultancy PA Consulting, which believes the government may be missing out on potentially valuable opportunities to look at the way it runs services, particularly as many of the government's longstanding IT contracts come up for retendering in the next few years.
Mark Brett, a senior outsourcing specialist at the firm, says that if the government were a multinational, it would now be asking for a "really accurate" picture of where back-office services could be aligned.
Government, however, because of its complex structure, would find this very hard to do. In fact, if anything, the trends in the public sector point the other way - that is, that organisations tend to be split up into smaller parts, which are then outsourced separately.
Trying to find the parts of government operations that could be grouped together is something on which both the Cabinet Office and the Office for Government Commerce has done work. The Cabinet Office's Flex shared service contract with Fujitsu is one example of an attempt to bring together, into a single deal with one supplier, different departments' IT requirements.
Guiding principles and a clear direction
But taking a more strategic approach could bring real benefits, according to Brett and his colleague, Jonathan Cooper-Bagnall, head of sourcing consulting at PA. "The government needs to raise the discussion up a level," comments Cooper-Bagnall. "It's about setting out guiding principles and a clear direction for outsourcing contracts."
Such a strategy could also take on board the complex and politically controversial question of offshoring - the practice of moving jobs out of this country, to take advantage of lower labour costs elsewhere. Although some backoffice processing is done offshore by some contractors providing services to government, it remains a hot political potato.
But taking advantage of cheaper labour costs need not mean moving jobs out of the country, points out Cooper-Bagnall. Instead, implementing a regional strategy could prove equally effective in stimulating economies in parts of the country in real need of more jobs.
PA sounds a note of caution, however, about seeing outsourcing as a panacea. In a report earlier this year, the firm warned that the sustained focus on reducing costs through outsourcing contracts risks undermining good relationships between suppliers and customers, in both the private and public sectors.
The company says that managing such contracts effectively requires investment by the customer - and that means that when weighing up all the costs, major contracts may turn out to be either neutral in cost terms or only marginally beneficial.
"As the government renews existing contracts, the debate should be about how to ensure it doesn't just get more of the same," comments Cooper-Bagnall.
"It has to try and find different ways of working and ways of innovating. That has to be a better route to cutting costs. It's all about working with suppliers, rather than simply rushing to get contracts signed."
