New Zealand


  • Service: Advisory, Business Performance Services, People and Change
  • Industry: Government
  • Type: Business and industry issue
  • Date: 15/10/2010

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Souella Cumming

Partner- Internal Audit & Public Sector/Government

+64 4 816 4519


Godfrey Boyce

Partner - Advisory

+64 4 816 4514

Sourcing can help governments realise better value for money 

Skills shortages in government can be more acute than in the private sector. It’s hard to compete for scarce resources in a competitive job market where compensation often doesn’t compare with that offered in commercial organisations.


The challenge for government is to make the most of the existing workforce. This can be done with training and development programs. Retention can be addressed by making straight-forward business processes as interesting as possible.  But once an employer has exhausted these strategies a shift towards other sourcing arrangements might need to be considered

Shared services and strategic sourcing

The most common approach within the public sector is shared services — bringing similar back-office activities such as finance, HR or IT together in one location. This consolidation is frequently accompanied by streamlining and standardising processes. Often cross-departmental sharing is required to reach the economies of scale required.


Organisations are increasingly aware of the savings and service level improvements that can be made through strategic sourcing decisions. A survey by The Hackett Group showed that commercial companies that had adopted an HR shared services model reported reduced process costs of up to 80 percent.


Changing attitudes toward sourcing alternatives reflects a desire to improve the overall quality of public services delivery. Governments are willing to consider a variety of options to leverage their people and skills to maximum advantage. If an organisation needs to augment their core staff with external resources, and they feel this can be managed well, there are a range of possibilities to consider.


Under pressure to provide better services for less money, many government officials expect to see the popularity of shared services grow. An increasingly large number of public and private sector organisations now appreciate that using shared services and other sourcing arrangements - especially in basic transaction processing -is a way to achieve better value for money. As the success of well-managed shared services implementation grows across governments, there is a real opportunity to learn from each other.


This has been adapted from a KPMG International Government article



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We work closely with the public sector and local government to improve quality of services, productivity and value for money.


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