As we wait for the delayed Public Services White Paper, now scheduled for publication in July, this week, I want to share two articles which caught my attention, captured my imagination and provide a basis for reflection. The first article by Gary Sturgess, in the Ethos Journal, published by the SERCO Institute, looks at emerging global trends in public services. The second article in the Washington Post talks about Indian outsource providers bringing jobs home to North America, close to customers.
SERCO is a global services provider, and the first article argued that the trend towards globalization of services was increasing. The article provides some good insights into the development of public services around the World. initially, I struggled with the article, looking for a deductive or compelling central logic. On a second reading, I took a different approach and considered the article from the vantage of inductive analysis.
For me, the article should have been anchored in neoliberal theory, which provides a rich economic and political framework and supports the globalization of public services thesis. New readers to my blog might be interested in previous articles on neoliberalism and its impact on public services:
- Will David Cameron and George Osborne become the Pioneers of Third-Wave Neoliberalism, just like Thatcher and Reagan Pioneered First-Wave Neoliberalism?
- Public Services Reform: U-Turns, Banana Skins, the March of the Neoliberals and the Demise of the Professional Interim?
- Public Services Reform: Shared Services, Outsourcing and Mutualisation?
- Public Sector Catch 22: Structural Reform, Strategy and Implementation – How to avoid a Omnishambles Recovery Programme? (Part 4 of 4)
Had the article been anchored in neoliberalism, it could then have looked at primary or secondary research and either tested the neoliberal hypothesis or come up with an inductive model to explain the analysis.
Whilst the article started out by stating that the trend towards globalization was increasing, there was little evidence of standardization and commodification of public products and services. For example, Coca Cola is a truly global product.
The article cited three fundamental barriers towards increased globalization of public services:
- Historical factors
- Cultural factors
- Political considerations
In many respects, the article provides a compelling argument in favour of localization of services, rather than globalization.
Moving on to the Washington Post article, it was interesting to read about examples of Indian outsource providers positioning call centres in Wall Street, next to customers, and employing the more disadvantaged Americans, without college degrees and from ethnic minorities – the cost of employing disadvantaged Americans in New York was challenging the labour cost arbitrage advantage of going offshore to countries like India.
So what are the lessons for the Public Services White Paper? It seems that the Government should establish which services are core and those should stay in public ownership and public sector management (operated efficiently). Non-core services should be opened up to competition, in line with neoliberal theory – cost considerations should be carefully balanced against service delivery models and required quality assurance. Services that can be truly commoditized (like Coca Cola), will be open to globalization – other services will need to explore localized delivery, as well. The critical question becomes: “Is the reference market local or global?”