Mutualisation: the evolution revolution begins for Outsourcing

Mutualisation: the evolution revolution begins for Outsourcing

Speak to any senior government official and the word “Mutualisation” will not be far away from entering the discussion. Yet in the conventional press there has been little or no acknowledgement of the quite revolution that the coalition government has begun.

So what is Mutualisation? Well conventionally it is “The setting up or reorganisation of a corporate body so that the majority of common stock is owned by customers or employees”. According to Cabinet Office papers “Mutuality can re-energise public services … at a time of political disengagement, the prospect of a wide-ranging and participatory civic renewal”. Brave and inspiring words indeed, but what does it actually mean? Perhaps the original Cabinet Office news release dated 12th April 2011 describes it best, “My Civil Service Pension (MyCSP) to ‘spin out’ as the first major central government mutual joint venture”. Finally this deal is about to happen.

Francis Maude went on to say “A one size fits all approach that has left little room for innovation. We are looking for more innovative ways to structure services. We know that employees who have a stake in their business, or take ownership of it completely, have more power and motivation to improve the service they run. They can also benefit from partnerships with private or voluntary sector organisations which can bring in capital and expertise.”

The award of the MyCSP contract will be keenly watched by outsourcing experts and critics alike. The winner will be one of the following companies Capita, Xafinity or JLT. What we all await are the precise details on:

  • What the private sector, government and employees ownership structure will be
  • Whether or not it varies according to performance and efficiency targets
  • What innovation, measurement and motivational target there will be
  • What plans to eventually float out the entity there might be
  • Any mandates that there could be to attract new volumes and act a scalable shared service centre
  • Whether the winning supplier has security of tenure or can be replaced as in normal outsourcing arrangements
  • How commercial will government allow the entity to be, etc

Katharine Davidson, director of strategy in the Cabinet Office Efficiency and Reform Group (ERG) last week announced a new position early in 2012, as Head of Commercial at ERG, to drive the strategy, which will create a “pipeline of opportunities for new models,” said Davidson. We are aware of four other governmental initiatives already in the pipeline.

The real test will be to see how fast and how commercial government will be in each of the succeeding deals, and then how fast “part equity models” appear in mainstream commercial outsourcing. In our opinion depending on the success of MyCSP 1, 2 and 3 may well see a return to outsourcing “mega deals” and a shrinking of convenience sourcing where multi-sourcing to many suppliers is the order of the day.

Posted in Outsourcing Comments: one


One Response to Mutualisation: the evolution revolution begins for Outsourcing

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