Are all your eggs in the public sector basket?

The recent review of government spending by Sir Philip Green, owner of Topshop and Bhs, has provided some damming insight into huge government wastage. This will have a massive impact on any business selling services to the public sector and ultimately, as a business services sales professional your career.

“As a business model you could not continue like this - it's impossible. There's nothing like this in the private sector”. Comments such as these from Sir Philip demonstrate the scale of the wastage that goes on right at the heart of government.  In his 33 page report he goes onto explain that savings could top £25 billion a year and points out “This is very basic stuff. It’s just executed very, very, very badly”. Here’s just some of the figures;

• £191billion was spent last year on procurement and property.
• Central government spends £61 million a year on laptops and desktops from 13 different providers, twice the market rate.
• 71K people have the authority to spend £1000 a month without being monitored.
• 400,000 hotel rooms were booked in London a year but with no central contract in place
• £84 million was spent on office supplies across 5 suppliers with 83 different contracts in place. The cost of paper ranged from £73 to £10.
• The cost of printing leaflets was £1.31 a unit compared to the market price of 26p. Printer cartridges ranged from £86 to £398
• £29 million a year was spent on car hire with no central contract in place.

These examples highlight the vast amounts of waste occurring within government and demonstrate the attitudes that pervade Whitehall. Things are unlikely to change rapidly; it is government after all, but with such an immediate cost saving available and wider cuts on their way, they would be wise to get their own house in order.

This is likely to mean a move away from regional and local procurement to a more centralised approach with far fewer suppliers. As Sir Philip points out in his report, the government needs to harness its buying power and economies of scale to negotiate better deals, drive down costs and deliver long-term value.  If you’re a sales professional selling to the public sector, this clearly will have a dramatic effect on your career – to what extent depends what you sell! 

If a business has all its eggs in the public sector basket then it could signal tough times ahead and it maybe even be a good time to search for your next sales job. A more centralised approach will mean suppliers are driven down on price in order to remain competitive, leading to tighter profit margins. Smaller, more regional organisations could struggle with the resources required to service the public sector nationally.

There’s no doubt that these cuts could be challenging for many businesses but it could also offer significant opportunity. There will be more money coming from a single pot rather than the many regional ones and fewer suppliers competing for it so the potential prize is huge. 

Talented sales people could also be in for good times. Fewer suppliers will lead to increased competition and anyone with experience selling to the public sector will be highly south after. Anyone with strong negotiation skills, a proven track record of high value contracts and experience of complex sales processes will be in demand.