Serviced Birmingham

June 4th, 2011

Birmingham has  many things to be proud of but its ability to manage the most basic publicity is not one of them. It absolutely confounds me that when creating the plan to outsource IT jobs to India, someone didn’t think about the publicity implications. From a PR point of view it ticks just about every hysterical box that you can imagine.

Since this managed to get itself  plastered all over the papers, I’ve been trying to figure out how a  Council could be so publicly inept. Birmingham’s problems with managing the current financial climate are well documented  but is the publicity garnered from the savings on 100 jobs really worth it? I do believe that savings should be made if we guarantee that money gets redirected towards the most vulnerable people. If sending some services off to India means we can spend more on people with disabilities then I think I’d grudgingly say, that’s something we should consider.

Unfortunately the economic reality in Birmingham is not that simplistic.

In 2006 Birmingham decided to take all of the IT infrastructure out of Council control and create a new organisation called Service Birmingham in partnership with Capita. The theory being that partnership with the  private sector would bring “efficiency” to the public sector. A contract was created and Service Birmingham is paid annually to provide IT services. The profits that are generated from the operation of this contract are split between Capita and Birmingham City Council (I don’t know what the split is).

As with any private sector company the principle driver is to generate profits for shareholders. The only way to generate profits is to drive down costs whilst maintaining the same income; outsourcing drives down costs.

So this raises an interesting question, if Service Birmingham are lowering their costs by outsourcing jobs to India then are they equally reducing their claim on the contract with Birmingham City Council? I have no idea what the answer to that question is  but I’d be very surprised that if, as a result of this process, there is any change in the terms and conditions of the contract we have with Service Birmingham.

This also raises the issue of the relationship of this quasi private entity and their political masters. The majority of the press coverage of this has labelled it as a Tory Council sending jobs to India. It would be quite a naive political organisation that wouldn’t consider the minuscule benefits of outsourcing 100 jobs to India against the nationwide bad publicity. If  you consider that the budget of Birmingham City Council is around £1 billion is it worth it? No, especially if you consider the paper thin majority the ruling coalition is sitting on.

The only conclusion I can draw from this is that it was a decision taken completely out of the political process and with little consideration of the people apparently in charge of the City. The only people likely to benefit from this are Capita shareholders and, apart  from the people who have lost their jobs, the people most  likely to suffer are Tory Councillors.

This really is a cautionary tale, beware the beast you create.


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