Local government outsourcing jumps 84% to £684m

The value of local government outsourcing contracts jumped 84 per cent to £684.9m in the first six months of 2016 compared with the same time last year, according to new research.

The latest UK Outsourcing Index from Arvato and analyst Nelson Hall shows the number of deals procured by councils rose by 50 per cent year-on-year.

The sustained growth in local government was in contrast to a two per cent dip in the value of outsourcing across for the wider public sector, which was worth £1.6bn.

Overall, UK outsourcing contracts signed in H1 2016 were worth £3.91bn, up 19 per cent year-on-year.

The average value of local government contracts rose by 22 per cent between January and June compared with the first half of last year.

New deals for services being outsourced for the first time accounted for almost three quarters - 72 per cent - of contracts, up from 50 per cent in the first six months of 2015.

IT accounted for the lion's share of outsourcing deals at 61 per cent. There were also business process optimisation contracts for areas including revenues and benefits, finance and accounting, and "blue collar" services.

Debra Maxwell, chief executive of CRM and public sector for Arvato UK & Ireland, said: "The sustained growth in local government outsourcing that we've witnessed over the last 18 months has continued in the first half of 2016, reflecting the ongoing pressure on local authorities to adapt and innovate.

"Unsurprisingly, investment in IT continues to be a major feature of contracts, as clients look to private sector partners to help them deliver business transformation in the face of ongoing budget pressures."