Often it’s throught that, even in econmic downturns, the public sector is a relatively safe place in which to operate.  Its employment ethos and mechanics have arguably been detached from the more volatile influences of the private sector.  But, so it would seem, not anymore.

You don’t need to be an economist to realise that the pressure on central and local governments globally to reduce costs is increasing massively.  In the UK discussions about funding for Councils’ 2009 budgets are being disclosed, and the increases in 2008 are paltry.  Uplifts on 2008’s fundings look to be between 0.5% and 2%.  But with inflation over 4%, and many UK councils still hurting from the cash tied up in Icelandic banks, this is leaving Finance Executives in throughout government concerned over margins.

This is one reason why ”public sector reform is absolutely imperative” according to the Prime Minister of Ireland Brian Cowen who shared this view this week amidst the wosening economic situation in Ireland. 

Ovum stated in June 2008 that the adoption of shared services programmes among European governments was going to accelerate over the next few years.  The advisory group indicated that opposition to the operational model was starting to recede among the more forward-looking Western European governments of Germany, France, the Netherlands and the Nordic markets of Sweden, Norway and Finland and that these governments would present greater potential opportunities for suppliers to this market over the next few years as governments invest in modernisation and transformation programmes.

But June 2008 almost feels like an age of innocence.  And speculations drafted then almost need re-writing now based on the financial events of the past few months.  Now political leaders are actually mandating shared services in plans to reduce costs and improve services.   The financial pressure on the sector means we will see an unprecedented shift in the adoption of shared services which will present excellent opportunities for consultants and vendors but mean significant redundancies in the public sector.