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Risky business

7 February 2011

Our recent shared services report confirms that local authorities are increasingly seeking efficiencies through outsourcing or similar partnerships. There are undoubtedly savings to be made. But also high level risks.

For example, after several years of outsourced operations, it might be difficult and expensive to bring the services back as in house skills may have been lost, even if the partnership with the private sector partner has been a success.

There is also an inevitable loss of control, where front line services are affected, leading to reputational and political risks that are hard to state in cash terms.

These risks can, and should, be managed through a sound outsourcing contract, but they cannot be avoided entirely and are not easy to quantify.

For many authorities, increased outsourcing will be a vital tool to save costs and adopt an enterprising approach to service delivery. A similarly enterprising approach to risk and reward will also be needed.

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