UK government funding of local authorities is being severely cut. Micro outsourcing can help local authorities bridge this funding gap. But micro outsourcing offers more than just cost savings. This article describes the top 6 reasons why local authorities should micro outsource.

What are the UK government’s local government plans?

As part of the Coalition Government’s deficit fighting measures, it announced that local government funding would be reduced by 28% over four years. In 2011-12, 9.9% would be cut with a further 7.3% cut in 2012-13.

The Local Government Authority, which represents councils in England and Wales, has calculated that the real cut in 2011-12, once the police grant was excluded, was closer to 12.1%, meaning that central government funding for council services was being reduced from £28.3bn to £24.9bn.

What does this mean?

In short, local authorities are being challenged to provide the same quality of frontline services, e.g., domestic waste collection, but with much less money from the Government. To bridge this £3.4bn funding gap, local authorities are exploring various measures that could help them reduce their costs. Could micro outsourcing be one such measure?

What is micro outsourcing?

Micro outsourcing, or micro sourcing, allows organisations, e.g., small and medium-sized enterprises, public sector bodies and third sector organisations, to outsource work to highly skilled freelance workers or independent businesses (service providers) based locally, nationally or anywhere across the globe.

This is distinct from traditional outsourcing where organisations engage in mega deals over several years with global outsourcers for multi-million or more contract values.

Why should local authorities micro outsource?

Micro outsourcing shares many of the benefits of outsourcing but also offers some new ones, too. The following describes the top 6 reasons why local authorities should micro outsource:

1. More efficient processes

In common with outsourcing, micro sourcing enables organisations to gain process efficiencies and increased effectiveness, as activities and processes are performed by service providers with specialist skills, know-how, best practices and up-to-date technology & equipment.

2. Delivers cost savings

Micro outsourcing reduces overhead costs and capital expenditures. For example, by micro outsourcing, an organisation could save on not only salary costs but also pension and other benefit costs. With a reduced headcount, other cost savings could include office space and equipment costs, which has a positive effect on an organisation’s cash flow.

3. Deployed resources are competitively priced

With micro outsourcing, service providers bid for your jobs. This ensures that your costs truly reflect the service provided. The process could be likened to eBay. However, unlike with eBay, the price you pay goes down rather than up!

Thus, local authorities are able to deploy competitively priced resources, sourced locally, nationally or globally, after considering not just price but also other factors, such as the expertise and location of the service provider.

Note. The deployment of competitively priced resources could potentially provide cost savings of between 50 and 70%.

4. Skills can be accessed "on-demand"

Many organisations cannot afford to employ certain specialist skills or need certain skills only on an irregular basis. In this cost-conscious post-recession period, organisations have become even more reluctant to employ underutilised resources. Micro outsourcing allows organisations to "plug in" expertise on-demand.

5. Enables organisational focus

In business, it is generally accepted that organisations do best when they focus on the core activities that give them a competitive advantage. This is no different for local authorities. By micro outsourcing non-core activities, a local authority could use more of its resources, e.g., management, staff and capital, on value-adding activities.

6. Allows relatively small duration or cost jobs to be outsourced

Organisations usually benefit from outsourcing, if they are prepared to enter into a multi-year agreement and can afford the multi-million pound fees. With micro outsourcing, service providers can work on jobs that might require only a few months work or only just a few days. Moreover, "deals" might be relatively small and valued in the thousands or hundreds of pounds rather than millions.

What can be micro outsourced?

Activities include Website development, IT support, debt collection, bookkeeping and accounts preparation, report writing, translation, payroll, clerical work, budget forecasting, data entry and training. As can be seen, outsourced jobs can cover a wide range of business activities and tasks.

How to get started?

There are a number of sites where you can submit your jobs. Well-known sites include careerbuilder, jobs.nhs, jobs.tes, mybirminghamjobs, jobseekers (jobcentreplus) and vacancycentral. You can also tweet your jobs or post them on LinkedIn. However, such sites do not specialise in providing a service for micro sourced jobs or for freelancers. Nonetheless, they do provide a large pool of CVs, which can be searched after payment of a fee.

There are, however, specialist sites. On such sites, you will be able to search for candidates, as with job boards, but you will be presented with freelancer services and not CVs, which can include irrelevant work experience and skills. You will also be able to submit your jobs, indicate private jobs that only invited service providers can bid on and interact with providers before inviting them to bid. Submitted jobs will receive real-time bids, and you and your chosen provider will be able to track work progress through the agreed milestone plan.

Summary

With reduced funding from central government, local authorities have been challenge to find effective ways to deliver existing front-line services without raising local taxes, such as council tax and business rates. Micro sourcing provides an effective way not only to reduce back office costs but also to improve the efficiency and focus of local authorities.

Copyright © 2011 by Peter Louis. All rights reserved