Understanding the Public Services Industy

Public Services Industry Review
Section 5: How can Government help the UK PSI to
be successful in overseas markets?
5.1 As with many other industries, the Public Services Industry is becoming increasingly
global. On the demand side, many governments are recognising the benefits of using
private and third sector organisations to deliver public services. They look to countries
with successful PSI markets to learn lessons and provide models for their own policy
development. Rising per capita incomes in the emerging economies are driving an
expansion in demand for services such as health and education as their citizens
increasingly aspire to the standards of living found in the UK and other advanced
economies 63 . They too are becoming part of this industry. On the supply side, private
sector providers of public services compete in each other’s markets and spread
innovations developed in one country to others. They also make choices about where
to bid for new contracts, depending in part on the reputation developed by different
governments for competitive neutrality, cost of the bidding process and ability to
partner effectively through the life of the contract. In this sense governments too are
competing globally for the valuable project management and delivery skills in the PSI.
5.2 This section considers what the UK government can do to assist and benefit from
the globalisation process in the PSI. This includes attracting foreign bidders for UK
service delivery opportunities as well as promoting the activities of UK firms operating
in overseas PSI markets. Encouraging and assisting firms to make the most of the
growing export opportunities in this area will lead to substantial benefits not only for
UK firms but also for the UK economy and domestic consumers of public services.
Overall the Review concludes that the best way that government can support the PSI
abroad is through maintaining and encouraging a dynamic and thriving PSI in the
UK. Recommendations towards that end were developed in the previous section. This
section adds a further recommendation related specifically to furthering the prospects
of the UK PSI in overseas markets.
The benefits of a thriving PSI in the UK
5.3 As mentioned above and supported in the call for evidence, the UK PSI is considered
by many to be the most developed in the world. Policy towards the commissioning of
public services has been innovative and has evolved to encompass a wide range of
sectors and types of services. This enables UK firms to exploit the extensive skills and
experience they have developed here to win business overseas.
5.4 Many UK companies have built their businesses by taking UK policy initiatives in areas
such as welfare to work and rolling them out internationally. Experience gained in the
UK has frequently been cited as key to achieving success elsewhere. There are many
examples which illustrate this ‘first mover’ advantage stemming from policy action in
public services markets:
63 For example McKinsey (2006) have estimated that the demand for health care from urban Chinese consumers will grow at
a rate of 12% over the next twenty years, with demand in India also projected to grow at a similar rate.
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