Study: Govt. outsourcing sees fast growth globally

The global market for outsourcing of government services is growing faster than outsourcing in any commercial segment, and is likely to more than double over the next five years.

That is one conclusion found in a new study, "Outsourcing in Government: A Path to Transformation," by Accenture Ltd., the international consulting firm based in Hamilton, Bermuda.

"By the end of the 1990s, governments around the world had transferred more than $1 trillion in assets to the private sector," the study said. Spending on outsourcing in both U.S. federal and state and local governments is forecast to grow through 2005 at an annual rate of 15.7 percent and 14.7 percent, respectively.

European governments' outsourcing is anticipated to grow even faster, at 17 percent per year through 2004, the study said.

Government outsourcing is more challenging than that in the commercial sector, according to David Hunter, global managing partner of Accenture's government market unit, and Tom Healy, the company's managing partner in the government outsourcing practice.

Public-sector outsourcing is more complex than in the private sector because, in most of the countries in the study, the services delivery reaches across the nation and is large scale, Hunter said. Governments "are certainly also dealing with a greater trade union aspect," he said.

The stakeholders involved also are larger and far more diverse, Hunter said, including employees, citizens and politicians. The greater complexity also stretches out the time it takes for governments to act on outsourcing initiatives, he said.

While governments frequently approach outsourcing as a way to hold down costs, its greatest potential is to radically transform government processes, the study said. Focusing on cost savings alone creates artificial constraints on thinking about the processes being outsourced, and limits the potential to significantly enhance government services.

The study can be found on the Accenture Web site: www.accenture.com.