Outsourcing has come under fire recently following G4S's failure to supply the requested amount of security staff for the Olympics. Instead of concentrating on the factors that led to that particular failure, commentators have spied their chance to castigate the very concept of outsourcing.
Outsourcing is privatisation, they cry. Outsourcing is far from privatisation – done properly, the client remains in control at all times. The client's purchasing a service, over a long period of time: as paying customer, they are perfectly entitled to specify exactly what they want. But a key facet of outsourcing is the shared bearing of risk: the partners are in it together. Not just financially, but also in terms of reputation. If things go wrong, both brands are weakened and, in the case of the supplier, future custom is jeopardised.
The media backlash has led to G4S's chairman John Connolly stating that "if a contract was being given out by a government department or other large business at the moment, you can understand they would find it difficult to hand that contract to us". Prior to this statement, G4S was prudently tight-lipped on the topic of future business with the government. It opted not to apportion any blame to its partner, even when it demanded an extra 8,000 security guards at short notice – a big ask for any organisation, even the world's largest security company. But the government is quite simply too large and too prolific a client to risk criticising in public.
With proposals being negotiated concerning the management of nine British prisons, and 1,100 back-office jobs supporting Bedfordshire, Cambridgeshire and Hertfordshire police, it is perfectly understandable G4S has sucked up the blame. But I'm sure, behind closed doors, that there has been some forthright discussion on the subject of governance.
Good outsourcing programmes take more than a robust contract. It is the governance procedures that keep things on track, driving the partnership towards the goals outlined in the supplier engagement stage. This is the client's medium for exerting control; this is how it helps itself to maximum value. Suppliers do not set out to "rip off" or "not deliver". It is a lack of interaction between stakeholders that leads to ambiguity and misunderstanding – two cardinal sins of any outsourcing relationship. Leaving expectations implied or non-formalised will lead to confusion, the mother of poor decision-making. Poor decisions are paid for not just in money but also in esteem – the erosion of respect for a company, or, in outsourcing's case, not just an entire industry but a whole abstract concept now written off by some people.
But despite poor public perception, outsourcing works. It is here to stay. The need for quality service at a lower cost is greater than ever. It is predicted that levels of public-sector outsourcing will increase, because in the vast majority of cases, it delivers the goods. Each year, hundreds of credible entries submitted to the National Outsourcing Association awards back this up. The fact that every single FTSE 500 company uses outsourcing reinforces it further.
Doing your tax disc online, buying a TV licence, getting your meter read and mobile radio for ambulance, police and fire brigades – these are all examples of highly successful outsourcing. As is the Police National Network, which links the databases of British forces, reducing the risk of cases akin to the Soham murders, where repeat offender Ian Huntley was able to move to another county with a clean slate and able to gain employment alongside vulnerable children. Now that the IT capability is outsourced to Logica, the chances of that happening are greatly reduced, and our children are safer for it.
The concept of outsourcing – working with specialists to supplement your operation to achieve cost benefits and fostering innovation – cannot be blamed for failures. But there are cases where deals are not being managed effectively. You get out what you put in: that means investing effort into strategic alignment, relationships and governance procedures. To succeed, outsourcing clients simply need to know what they want, and how to make sure they get it.
