Outsourcers could use a pat on the back. Even as they quietly go about rebuilding their balance sheets and reputations, most people will still associate G4S, Serco et al with screwing up security at the Olympics and overcharging the government for tagging criminals.
But, lest we forget, the industry, which covers everything from IT support and construction to cleaning and catering, is a veritable economic powerhouse. In 2013 it employed 3.3 million people, more than 10% of the UK workforce, and accounted for 9.3% of the British economy (gross value added or GVA).
That’s according to Oxford Economics analysis cited in the annual review of the Business Services Association (business services being a more anodyne name for outsourcing), published today.
It’s not exactly surprising that a group representing outsourcers is arguing they’re A Good Thing. But it is a reminder of the huge contribution the web of outsourced services makes to the UK economy.
And that contribution seems to be increasing too – in the third quarter of 2015 £2.2bn of outsourcing contracts were signed, up 69% on last year, according to Arvato (surprise surprise, an outsourcer itself). Although that was partly a temporary post-election bounce (the value of the contracts jumped 228% from the previous quarter), in 2014 more than half of the £6.7bn deals agreed were first-time contracts, up from a third in 2013.
Outsourcing is, of course, nothing new or controversial in the private sector – why do something when you can pay someone else to do it more cheaply? Nonetheless, as the Tories push on with their attempt to reshape the state into something slimmer and more streamlined, the debate over outsourcing everything from prisons to back to work services will continue.