The 2010 budget has been dismissed by many as a phantom budget – a political step that saved the major announcements for during or after the election campaign. But there are some elements of the budget statement that should be of interest to the sourcing community; some presenting opportunities.

For example, National Insurance contributions are being raised by 1% for anyone earning over £20,000 annually. This small amount may not be that material overall, but does it sweeten the pill for those already considering offshoring to consider it more strongly, or even actually take the plunge?

The government has also pledged an aspiration to pay a minimum of 80% of all undisputed invoices within five days, in an effort to improve cash flow conditions for small and medium sized enterprises. Those who work in finance and accounting services will know how hard this will be to achieve in practice. To achieve this level of performance, Civil Service accounts departments would need to be operating at a level comparable with the best external service providers. Given that many do not possess the technology, scanning and workflow assets required to achieve this, it’s a worthy, but probably unachievable idea, without investment or considering using procure to pay outsourcing solutions.

Finally, with talks of significant spending cuts and moves of thousands of civil service jobs from London, an increase in public sector sourcing is inevitable. The £11Bn of efficiency gains announced this week is only the start. Of those private sector companies that have reported health and growth in the last few months, the majority have undertaken considerable internal shake-ups and restructuring, resulting in cost savings, more variable cost bases and more effective operating models. This will continue to be a tactic that the UK government will look to emulate, opening up greater public sector sourcing opportunities across a variety of functions. It is just the shape and nature of the sourcing that is to be determined, and this will become clear over the next two years or so.

In this climate, public sector departments and their service providers should remember old lessons; not to deploy new outsourced arrangements too quickly. Care should be taken to fully understand the true intent for the contract and ensure that this is baked into the sourcing process, contract and ultimately way that the service is operated. This intent is likely to include technology innovations, which need to be carefully planned and introduced. The oft-mentioned sacrifice of long term effectiveness for the sake of short term cost-cutting is of real concern right now. As is the duplication of effort between departments, where the same problems are being tackled in different ways.

Perhaps we could take a leaf from the Danish book. Their government has taken a direct approach to sourcing, albeit in a much smaller country. The government manages all IT hosting and delivery via central contracts, leaving the intricacies of the application of technology to the individual departments – although in its infancy, the approach appears to have merits. Perhaps the UK government should set similar strong direction about how sourcing should be undertaken, preventing departments from using unnecessarily divergent approaches.