Monday, July 16, 2012 Outsourcing in Ireland
During a time of economic crisis, changes have to be made and costs need to be cut. In the article Outsourcing in the Public Sector in Ireland- Where to Next?, Pearse Ryan, partner in the Technology & Life Sciences Group at Arthur Cox, explores two topics on cost saving tactics and reforms: shared services and outsourcing. Ryan believes that shared services must incorporate at least some element of outsourcing in order to reach the maximum potential cost savings and efficiencies. Outsourcing in the Public Sector in Ireland- Where to Next? examines where outsourcing sits within the “umbrella” of public service reform and expenditure management from a government policy point-of-view.
The process of making cuts requires tough decisions and extensive research on which areas of the business are going to take the greatest hit. International experience demonstrates that expenses can be reduced by outsourcing detailed non core competencies operations to external suppliers. Although outsourcing occupies a less clear cut future in the Irish public service, there are arguments that suggest outsourcing should become a much more popular option.
The public service reform programme¹, which was started by the Fianna Fail/Green Party, has been continued by the current Fine Gael/ Labour coalition government. These preceding projects include the Report of the Task Force on the Public Service (issued in November 2008)¹, the Bord Snip Nua report¹, and the Croke Park Agreement¹. Following the OECD review of the Irish pubic service, the Task Force was appointed in May 2008. Although the OECD report was previously conducted to the present economic crisis, it provides the platform for much of the succeeding public service reform agenda. The report from the Task Force discussed outsourcing stating “the use of shared approaches, whether insourced, outsourced or co-sourced, should be prioritised.” This gives direct reference to the importance of using outsourcing and has been reproduced in “policy and review type documents to date.”
The Special Group on Public Sector Numbers and Expenditure Programmes, or An Bord Snip Nua as it is informally known, is a board created by the Irish government in 2008 to recommend cuts in public spending. Their report recommended “that the possibilities of outsourcing services should be actively pursued in each area of the public service with a view to building on the savings obtained through the successful launching of shared services initiatives.” This report stirred the pot a little by suggesting that shared services be the main element of a cost saving and efficiency programme with outsourcing as the material component.
The Croke Park Agreement, or the Service Delivery Options to the Public Sector Agreement 2010-2014, was intended to set the scene for public sector industrial peace and reform. In return for this agreement, there were to be no further public sector layoffs or pay cuts imposed by the government. This is where outsourcing made its first entry into the public sector reform programme and the formal public debate. Historically speaking, outsourcing has been something that the public sector unions and public sector bodies have been set against or chosen not to engage in, in any material form. Pearse Ryan declares that outsourcing is not a topic that usually wins public favour or elections. The government policy on outsourcing is one of extreme caution which is reflected in a series of requirements. These requirements are not shared by the shared services area.
The issue of outsourcing is not a prime component of the public service reform agenda; however, outsourcings have and will continue to be apart of today’s culture. What is examined in this article is the possibility of increasing outsourcing in order to reduce costs and increase productivity from a historical basis. Outsourcing allows companies to reduce training cost and eliminate non core tasks increasing productivity and reducing expenditure. It allows employees to focus on what they are specifically trained for instead of working on tasks that are easy to complete but take away valuable working time. With the emergence of more outsourcing companies in Ireland, who are complying with the regulations set forth by the Croke Park Agreement, the emphasis must shift to the public sector. With this shift towards outsourcing companies, a difference will be seen and costs will be slashed. Without the current economic crisis, outsourcing would not now be a recognized possibility for public service delivery. However, we are experiencing difficult times and something can be done to help alleviate the stress of overbearing costs and expenses, and that something is outsourcing.
For the original article and an expanded view on outsourcing, click here.
¹ http://www.arthurcox.com/uploadedFiles/Publications/Publication_List/Arthur%20Cox%20-%20Outsourcing%20in%20the%20Public%20Sector,%20March%202012.pdf
Reader Comments (1)
This article is great and so helpful...great insight, brilliant writer!