Capita CEO sparks a Whitehall Outsourcing Riot

Capita CEO sparks a Whitehall Outsourcing Riot

Accountants are not renowned for speaking out, not prone to criticising their clients, let alone challenging governmental authority, policy and wisdom. Paul Pinder is a quiet and considered accountant who heads one of Britain’s most successful outsourcing service providers, Capita – now worth £4.5Bn. Personally and corporately enriched by decades of local and central government contracts, why did he chose to talk about “criminal cuts to front-line services”, directly attacking the lack of imagination shown by the police authorities and timidity of local council authorities to using outsourcing to absorb and reduce running costs. Was this a Gerald Ratner moment?

Pinder is echoing private executive whispers and disgruntlement from all current outsourcing suppliers. A year ago, Francis Maude demanded massive (20-25%) cuts in existing contracts, summoning supplier CEO’s and executives for a personal bullying. A year later and literally hundreds of good ideas on how to achieve, and in many cases exceed, the cuts demanded have fallen on deaf departmental ears. The civil servant machine has fought back very successfully and today inertia paralyses Whitehall, the Cabinet Office and local government. Politics has now determined to play the “frontline services” game, as Pinder correctly pointed out in his Financial Times interview. Better to cut library services and gain the sympathy of the voter next time round, than to acknowledge the unacceptable numbers of back office employees nestling in the background. “90% of the UK’s 774,000 civil servants are performing back office functions”, Pinder confirmed. Applying outsourcing to these administration and processing functions will achieve the cuts without messing with frontline services.

These extraordinary back office support ratios equally apply to our army, police and emergency services. This is government’s real Gordian knot. Although the coalition government started well, it has frustrated and even humiliated suppliers who are more than capable of securing the needed savings by largely refusing to reduce manning levels via automation, resigning process workflows, consolidation of departments, etc. Secondly, the flow of new central and local government outsourcing contracts has all but stopped. Capita and competitor Serco, lit fuse of public debate by openly calling public expenditure to be put into perspective. We should all support this notion.

A Whitehall riot of vested interests could result.

This government needs to be bolder and more honest with itself. The Whitehall mafia is more than capable of slowing the cogs of change and probably is. Other outsourcers and the public should rally to the call of “Cut the fat and save the frontline”.

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One Response to Capita CEO sparks a Whitehall Outsourcing Riot

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