As deep cuts to the budget are being made to counteract the impact of the national deficit, the UK government is being advised and criticised over the money-saving option of outsourcing a variety of IT services both domestically and overseas.
Analyst Ovum suggests that the best way in which to save cash is to outsource services to India and it points out that despite the relatively small amount of business that the public sector gives to Indian vendors, it is expecting to see a dramatic rise as the government seeks to tighten the purse strings across the board.
Ovum’s Ed Thomas said that in previous years there had been reluctance within the government to outsource IT services to India, a nation that is keen to invest in cloud computing, because it could potentially be interpreted in a negative light by UK voters. He now believes that saving money will be a greater concern, resulting in the increased use of outsourcing to handle the data burden of the public sector.
The impact of outsourcing overseas could be significant, with some public sector organisations seeing their budgets reduced by 40 per cent and the resultant job losses in the UK could number in their thousands, according to Ovum.
Mr Thomas said that the recession had had an impact on the global IT outsourcing market, with public and private organisations less willing to commit to a single provider for extended periods.
Despite this negativity, there is hope for small and medium sized UK firms which deal in IT outsourcing, because the government has also committed to distributing a quarter of its external contracts to domestic businesses. This is seen as a step in the right direction that will help to stimulate the economy and grow the employment market, but experts have outlined the challenge facing this scheme, which include security risks and potential procedural problems.
Investment in the IT market in the UK is set to grow steadily as confidence returns, but those who rely on public sector money to make ends meet could face stiff competition from overseas providers who appear attractive because of low headline costs. The real costs of effectively managing such engagements are another debate entirely.
