Gov shared services spending to hit $1.27bn

UK government spending on shared services is expected to rocket over the next five years as demand for centralised services increases.

Shared services spending in the UK public sector is forecast to hit $1.27bn in 2012 compared to just $311m this year, according to analyst Datamonitor.

The Outsourcing and Shared Services in Government IT Management report predicts spending on shared services across the US and Europe combined will hit $76bn by 2012 compared to $57.4bn this year.

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Shared services are centralised applications or business services - such as HR or accounting - that can be used across organisations and are often outsourced to third-party private sector service providers.

Kate McCurdy, public sector technology analyst at Datamonitor, said shared services could be viewed as internal outsourcing where economies of scale are generated by building a single service to replace several smaller ones.

By turning to shared services Datamonitor says public bodies can improve the efficiency of technology rollouts and create an environment in which all parts of the business can fully benefit from technology.

This could particularly benefit government organisations - which traditionally have back office functions duplicated across departments - as it would reduce maintenance costs and ensure consistent service.

Governments will initially look to shared services for administrative tasks because using the approach for higher value tasks could be politically risky, the report said.

Once the use of shared services has been shown to be beneficial, the approach could also be used for higher value projects such as citizen contact services, tax collection and social payments.