SAY the word outsourcing and something strange happens: people hear the word redundancies. Members of the Public and Commercial Services Union recently staged a 24-hour strike that affected driving tests, passport services, museums, job centres and benefit offices, in part because of growing anger at job cuts and the outsourcing of work in the Civil Service.

But frontline dissent won’t stop the big push for greater efficiencies across Whitehall, says David Boulter, the chief executive officer of Capgemini Aspire, a partnership between Capgemini, the consultancy, and HM Revenue & Customs.

“Governments will continue to squeeze the amount of money available for civil servants and, therefore, government departments will be looking at different ways of doing things,” he says.

“What is acceptable and what is not acceptable will continue to be challenged. I think we can expect more outsourcing. I think we can expect more business-process outsourcing – and another word often used for that is shared services.”

It may seem like a contradiction in terms, but shared services will involve one department in Whitehall handing management control over to another department, just like outsourcing, says Chris Price, the head of government and public sector consulting at Alsbridge.

What is it going to be like in five years? “I think that we will see a lot more real outsourcing to commercial organisations,” he says. “In the private sector, organisations that do share services eventually look at outsourcing to get the extra benefit that they couldn’t otherwise achieve for themselves because they are not necessarily experts in transaction processing.”

The Government needs to decide whether shared services is the first step in a long-term move towards outsourcing, says James Close, a partner in government services at Ernst & Young. “If you look at the private sector . . . it knows that it is establishing a shared-service centre to create the option for outsourcing in the future, which means – at the very least – that it does want that flexibility . . . so that the next step to outsourcing is not a huge one.”

Perhaps more importantly, the Government needs to select the activities that it wants to outsource, Close says. “I think the current approach favours the idea that ‘the private sector is a solution to all of the public sector’s challenges’ almost too much.

“There needs to be more identification of where outsourcing will deliver significant benefits and where the market is actually in the best position to deliver; where there is genuine capability in the market rather than creating private sector monopolies in the place of public sector monopolies.”

More tough and perhaps unpopular choices lie ahead when the Chancellor, Gordon Brown, takes over at No 10.

THE VIEW FROM INSIDE WHITEHALL

“We are an industry, not an organisation. For shared services to work, there has to be buy-in from those who are affected by it. The PM can’t just say ‘thou shalt’ and it will be done.” “The priorities of shared services is customer first and efficiencies second.” “We have to expect a reduction in head count. We will be consolidating call centres. The same will be happening in frontline offices and we will be consolidating our presences on the high street.” Ian Watmore, head of the Prime Minister’s delivery unit at the Cabinet Office

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