BrazilDutch government spending on external staff to record high
The spending of the Dutch government on external consultants, IT professionals and flexible workers has reached its highest point in history, despite continued efforts by the government to curb spending.
Of all the money spent on external staff, €1.4 billion last year, 38% – or €530 million – flows to the pockets of IT firms and professionals. For years now IT has been the government’s largest cost item, but the speed and volume with which it has grown is striking. Just three years ago, external IT spending amounted to ‘only’ €351 million.
The major digitisation agenda of the government is obviously the main driver behind the bulging budget; from large ERP programs within Defence and the establishment of new shared service centres, to beefing up the cyber security frontiers of the public sector and the roll-out of digital-led ways of working at government agencies.
The spending on external IT staff, in particular consultants, finds itself however under a magnifying glass. After various failed system implementations, mostly major infrastructure and ERP programmes, politicians are becoming increasingly critical of such projects. Despite the mounting pressures, government agencies are fending off the criticism – stating that they need to rely on externals for expertise that is lacking in-house, on top of the fact that they struggle to hire IT professionals amid the highly competitive labour market for digital talent.
The majority of IT spending goes to large system integrators such as Accenture, Atos, Capgemini, and home-grown players Centric and Ordina. At a more strategic level, the government works with IT consulting firms, such as the likes of KPN ICT Consulting, PBLQ en VKA, and the consultancy arms of the above-mentioned IT players. Flexible workers are provided by intermediaries and brokers such as Brunel, Between, HeadFirst and global staffing giant Randstad.
Consulting spending
Analysis of the other sourcing categories shows that all types of spending have risen compared to a few years ago. Strategic consultancies – firms that conduct strategic and economic policy work for among others the House of Representatives and ministries – have seen their fee income jump by 32%. Interim managers have enjoyed even better fortunes – their income increased by 40%. Interestingly, management consultants have fared less well, with their income down by nearly 40% compared to three years ago.
With aggregate spending of €1.4 billion, the Dutch government last year splashed out 10.7% of all personnel costs on external, which is higher than the 10% threshold advised by politicians (known as the ‘Roemernorm’). This norm has now been exceeded for three consecutive years, and commenting on the revelation, politician Ronald van Raak said that the time has come to legally ground the norm in the sourcing processes of both central as well as local governments.
Easing the higher external consulting bill is the fact that the Dutch government has seen its total budget grow too, with this budget €700 million higher than three years ago at €12.2 billion.
