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Outsourcing by Government Departments

Summary

‘Outsourcing’ can refer to the transfer of services from the public sector to the private sector or other bodies. It can also refer to any services bought by public bodies from the private sector or other bodies, whether historically done by the public sector or not. 

According to the Cabinet Office’s Sourcing Playbook (2023) – the current guide on best practice for government sourcing decisions on public services – an ‘outsourced service’ refers to any public service “obtained by contract from an outside supplier.” Outsourcing activities range from the simple and well-understood to the complex and risky.

In the Sourcing Playbook, “in-house” refers to delivering a service in-house “using internal resources and expertise.” The process of bringing services under greater government control, either by bringing service delivery fully in-house, or managing it through dedicated bodies, is referred to as ‘insourcing’.

Components of a service can be delivered through a mix of insourcing and outsourcing.

The Sourcing Playbook recommends that decisions on whether to deliver services 'in-house', with the support of an external supplier, or through a mixed model should be based on a thorough analysis of value for money.