Times are tough, it goes without saying. The Cabinet Minister’s decision to meet with the Government’s biggest suppliers to ask them what they can do to help cut the cost of their services is just the most recent example.

When news broke that Cabinet Minister Francis Maude had requested the meeting with the likes of IBM, BT, Hewlett Packard, Serco, Capita, Capgemini and Steria the idea of contract re-negotiation started to loom in people’s minds.

The matter is not black and white. While the coverage has tended to look at the matter as though the Government were in a position of dominance, the reality is otherwise.

To begin with, it is unlikely that the Government wants to engage in litigation disputes and pay termination fees left, right, and centre. Also, suppliers may be being asked to revise their pricing but where they do, they will most certainly receive something in exchange like a contract extension for example.

But more importantly the Government needs to consider the reasons for which it has decided to outsource – which may include capacity along with cost.

"What the Government fails to understand is that the main benefit of an outsourcing relationship enables them to focus on the work that is core to their value proposition,” says Ferenc Szelenyi, Dell Services' VP EMEA, public sector services.

The relationship between the Government and its suppliers is a symbiotic one, but it is also one that evolves over time. Every private/public partnership is cemented on the belief that the work being outsourced is unique and must be managed uniquely.

“The Government expects its outsourcing service providers to maintain the complexity rather than to simplify and standardise the work processes. [For example, when] processes and people are moved to the provider in their existing state and are independently managed next to countless similar processes of other companies, the cost and service benefits of standardisation and simplification are lost," observes Szelenyi

Similarly, if we look at the existing relationships between various Government bodies and private suppliers (i.e. Capgemini’s handling of tax collection or more recently the award of a £415m contract by the Ministry of Justice to Serco to manage prisons), it is clear the Government cannot extirpate its relationships from suppliers. In the end is in the best interest of both parties to collaborate for mutually beneficial gain.

“Just as the Government seeks to save money, reduce risk, and/or enhance the quality of its operations, the service provider seeks to earn a profit, build on its service capabilities, and leverage its growing expertise for the future. The most successful outsourcing relationships are those that lead to long- term value creation for both parties. It is critical that the Government never loses sight of the fact that the relationship is a bilateral one,” concludes Szelenyi.