Home > Back to Publisher > Report Information

Public Service by the Private Sector: Examining the Government Services Market (Strategic Focus)

Datamonitor
June 24, 2009
35 Pages - SKU: DFMN2303340

Abstract Table of Contents Search inside this report Related Reports

Introduction

Although outsourcing began largely in the private sector, the public sector has emerged as a bourgeoning market as well, with vendors having developed secure onshore operations in an effort to capitalize on high demand for private sector partners with the capacity to deliver services to governments. This report focuses on drivers, inhibitors and strategies for vendors and governments.

Scope

Provides an overview of how government agencies are engaging government services providers to improve service delivery
Analyzes data from an end-user survey of government agencies on BPO and ITO drivers, challenges and priorities
Provides recommendations to agencies and vendors navigating the government services market

Highlights

Economic, business and technology factors are driving government outsourcing

Outsourcing helps agencies reduce operating costs and allows them to focus on core tasks

Vendors must invest in a vertical go to market approach with strong strategic planning

Reasons to Purchase

Learn about how government agencies are engaging the private sector to improve services and increase efficiencies
Understand the drivers and inhibitors behind the government services market
Identify strategies which agencies and vendors should adopt for future success in outsourcing

Overview
Catalyst: Summary
KEY MESSAGES: Economic, business and technology factors are driving government outsourcing; Regulatory and political barriers are the key challenges to government outsourcing; Outsourcing in government is concentrated in the larger markets but is likely to expand; Outsourcing helps agencies reduce operating costs and allows them to focus on core tasks; A number of issues make government business processes more likely to be outsourced; As the outsourcing market develops, governments have become better-informed buyers; Vendors must invest in a vertical go-to-market approach with strong strategic planning; Table of Contents; Table of figures
MARKET OPPORTUNITY: Economic, business and technology factors are driving government outsourcing; A lack of sufficient and appropriate staff resources is the leading factor for outsourcing in government; Governments are continuously faced with the challenge of 'doing more with less'; When resources are strained, organizations tend to re-evaluate operations; New and modern technologies are required to make BPO more feasible; Shared services environments laid the groundwork for outsourcing in the public sector; Regulatory and political barriers are the key challenges to government outsourcing; Privacy and security issues prevent agencies from taking advantage of outsourcing as does the private sector; Navigating the political landscape is a challenge for governments considering BPO for public sector jobs; Institutional culture and government concerns about giving up control are a key barrier to outsourcing; Outsourcing in government is concentrated in the larger markets but is likely to expand; The public sector has seen substantial growth in outsourcing in recent years; The US and UK public sector make up a significant portion of the industry; The US is the largest government services market opportunity in the world; The UK's early adoption of shared services has led to a mature market for government outsourcing; The market for government services will spread to regions outside the US and UK in the coming years
CUSTOMER IMPACT: Outsourcing helps agencies reduce operating costs and allows them to focus on core tasks; As the market becomes more sophisticated, governments must define what constitutes a 'core task'; A number of issues make government business processes more likely to be outsourced; Resource-intensive processes provide the most opportunity to reduce costs by outsourcing; 'Non-core' functions are generally the preferred areas which governments will look to outsource; Business functions with potential for automation will deliver the greatest savings; Government services providers are slowly evolving from strictly back-office functions to frontline service delivery; Basic administrative functions and IT consolidation are the first step in government services provision; Core administrative functions not at the core of agency mandates are higher on the value chain; Constituent-facing functions are the next frontier for government services providers; As the outsourcing market develops, governments have become better-informed buyers; Vendors have faced challenges meeting the demand for BPO services; Long-term deals are - and will likely remain - rare occurrences; The economic downturn has led to new approaches to procuring and delivering BPO
COMPETITIVE LANDSCAPE: The US market is dominated by a small number of major vendors; Vendors in the UK have benefitted from a focus on increasing efficiency in government; Vendors in India have a domestic presence, and a limited but expanding presence abroad
GO TO MARKET: ADOPTING A VERTICAL APPROACH TO GOVERNMENT: Vendors must understand the unique intricacies of the public sector outsourcing market; Be prepared: government contracting can be risky; Vendors must be prepared to invest a significant amount of time and resources into meeting regulations; Vendors must adopt both short- and long-term approaches to the government sector; Vendors must adopt a strong vertical strategy for providing government services; Vendors should hire managers with experience in government contracting to navigate complex processes; Opportunities for vendors lie in common programs which exist across multiple jurisdictions; Successful vendors will wait patiently, and remain active while they wait; Agencies have become more prepared buyers; vendors must become more prepared as well; Dialogue with government decision makers will lead to more outsourcing wins; Vendors that can provide concrete figures around ROI will be most successful
APPENDIX: Definitions and abbreviations; Methodology; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Figures: Figure 1: Lack of human resources is the key driver for outsourcing in government; Figure 2: Over 75% of government agencies have seen their budgets remain flat or decrease; Figure 3: Quality control, regulations and security are the leading concerns for agencies; Figure 4: Global outsourcing spend by vertical, 1994 - Q1 2009; Figure 5: Total outsourcing spend by vertical, 2006-2009 Q1; Figure 6: Public Sector Outsourcing Spending as % of Top 5 Markets, 2008-2013; Figure 7: Compound Annual Growth Rate (CAGR) in outsourcing spend, public sector, 2008-2013; Figure 8: Strain on internal resources is driving agencies to consider outsourcing; Figure 9: Application and website hosting are the key areas for ITO in government; Figure 10: Evolution of outsourced functions in government over time; Figure 11: Vendors must adopt a vertical offering and take a strategic approach to government

Public Service by the Private Sector: Examining the Government Services Market (Strategic Focus)

Share this report

Other tasks

Research Assistance

Related Markets

Outsourcing Reports

Free Alert Me service