Vast Majority of Government Executives Report Outsourcing ''Important'' or ''Critical'' Activities, Accenture Report Finds

Business Wire, May 15, 2003

Business Editors/High-Tech Writers

WASHINGTON--(BUSINESS WIRE)--May 15, 2003

Nearly 90 percent of government executives outsource activities that are "important or absolutely critical" to their mission of citizen service delivery, according to a study released today by Accenture (NYSE:ACN). Only 2 percent of government executives surveyed said that outsourcing is "relatively unimportant to their mission" of delivering services to citizens.

The study -- which entailed surveying and/or interviewing more than 150 executives in 23 governments in Asia, Europe, North America and South America -- also found that governments outsource mainly to improve the speed or quality of the service they provide to citizens and other constituents. Among the activities and services that these governments outsource most often are staff training and education programs; finance and accounting, human resources and supply chain operations; and information technology applications and infrastructure.

"As governments become more experienced with outsourcing, they seek new ways to derive greater value from these arrangements and are therefore more inclined to outsource processes such as procurement, finance and accounting, and human resources, which were previously considered too critical to outsource," said Steve Rohleder, group chief executive of Accenture's global Government practice. "By outsourcing certain critical services and functions, governments can improve the quality of service they provide to citizens and other constituents while also increasing operational efficiency and lowering costs."

Government executives who said they outsourced to gain access to technology, change operations or gain access to workers with specific skills were more satisfied with the results than were executives who said they outsourced primarily to reduce costs.

For instance, 71 percent of executives who said they outsourced to access new technology, 71 percent of executives who said they outsourced to centralize or standardize operations, and 70 percent of executives who said they outsourced to gain access to expertise indicated that these objectives were "mostly or fully met." By contrast, only 50 percent of executives who said they outsourced primarily to reduce costs and only 24 percent of executives who said they outsourced to increase revenues said their objectives were "mostly or fully met."

The Accenture study also found that governments, which used outsourcing to change the way they operate, were more inclined to engage in business process outsourcing than were governments that primarily used outsourcing to reduce costs. More than two-thirds of the executives who said they used outsourcing to transform their agencies indicated that they achieved change by outsourcing business processes.

Based on the data and in-depth interviews with government executives, Accenture also concluded that governments usually outsource to achieve one of two objectives: make changes in government operations to improve citizen satisfaction and address severe budget deficits, or create efficiencies through cost reductions and greater productivity. On that basis, Accenture placed each of the 23 governments it surveyed into one of two groups according to the government's outsourcing objectives and then charted the governments along continuums to illustrate the degree and complexity of each country's experience with outsourcing.

The Accenture study found that the United Kingdom has amassed a broad portfolio of capabilities for managing outsourcing contracts while achieving greater value from the money government spent on outsourcing, and that it is the most mature of the governments studied in its use of outsourcing to drive change. Canada and the United States also are among the most advanced in using outsourcing to modify the way government operates.

"Given the numerous and varied outsourcing contracts the United Kingdom has managed, there is much that other governments can learn from their experiences -- particularly in the critical area of workforce management, where the United Kingdom has been especially effective," said Tom Healy, the partner responsible for Accenture's global Government outsourcing work. "Still, some countries that are not as experienced in their use of outsourcing, including Mexico, have nonetheless used outsourcing effectively."

For instance, the Institute for Social Service in Mexico outsourced the management of doctor's appointments at clinics, and as a result, was able to shorten the time from hours to minutes that the nation's 10 million government workers must wait to see a doctor when they go to the clinic.

Governments in Singapore, Hong Kong and Japan are the most experienced in using outsourcing to achieve process efficiencies and reduce operating costs, and they have achieved those results by consistently using the same proven processes. Consequently, these governments have been able to use the money they saved to fund other government operations.