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Psst! Want to buy a consultant?

Psst! Want to buy a consultant?

Following on from last week’s musings on middle management and their approach to hiring people, I’ve been following a conversation in another place about how to go about outsourcing and/or building shared service centres. This was being led by a group of senior managers, mostly freelance ones as it happens, and mostly working in the public sector. And what really worried me was the lack of awareness of the issues they are facing.

Firstly there seemed to be a blind assumption that outsourcing saves money. Unless it’s done very carefully indeed, it doesn’t. What you make up in bottom line savings you lose out in increased supervisory time and generally reduced levels of service. There will still be a saving, but it won’t be anywhere near what you think if you cost in all the factors.

For example, I remember a public body close to a previous client of mine who outsourced a whole department. They claimed they would make a significant cut in routine expenditure by doing so. Except they not only outsourced the service, they handed over all the staff they used to employ as well. Under TUPE rules, which prevent any loss of terms and conditions, and an existing agreement about future pay rises, I couldn’t quite see where the savings came from. Plus they had to employ a few extra senior guys of their own to oversee the outsourced service.

Bonkers, isn’t it.

Anyway, getting back to the point, this discussion evolved to the point where the members though they should lobby HMG to be allowed to provide an expert outsourcing consultancy. That, on the face of it, is an excellent idea. It is, after all, pretty much what I was saying last week, that you need real expertise to get these things to work as advertised.

But hang on a minute: if these guys have held senior positions in the public sector as they claim, they can’t have failed to notice the presence of the OGC procurement guidelines (for which read “hard and fast rules”) about how high value contracts should be let. These are so esoteric, they’re almost worth a whole book to themselves. For example, there has to be an open tendering process. Fair enough but the way that works is that you are not allowed to discuss the requirement with potential suppliers because that gives them an unfair advantage when bidding for the work…

Say what? You are required to formulate an ITT for a potentially multi-million pound piece of work without doing any market research to find out what questions you need to ask? Surely not, but that’s what the rules say. Of course there are ways around this – employ an external consultant to ask for you perhaps – but it does add a whole new layer of complexity to an already difficult task. And complexity, as we all know, equates to costs. So even smaller savings than were hoped for.

So for them to get this work they have to go into open competition with a few other minor players, small companies like Accenture and IBM.

Or, of course, they go for the consultancy role and take over the management of the outsourcing procurement and execution programme. But tarry, you, the law hath one more hold over you.

To get an HMG contract you have to go complete a Pre-Qualification Questionnaire or PQQ for short. This is meant to show you are able to take on the work. The only problem is that the PQQ has certain parameters and rules of its own. You have to demonstrate previous deliveries of the same piece of work or something damned close to it (although, interestingly, it doesn’t stipulate that these should be successful deliveries…). You have to have cash reserves equal to three times the total value of the contract. You can’t join up with a like-minded group in a formal or informal collaboration and aggregate your assets to meet this one either. There are many more similar constraints.

All in all, you can see why the otherwise excellent idea of these guys is going to bump into some pretty insurmountable obstacles. And what really worries me is that they haven’t realised it yet…

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited<

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