Council outsourcing contracts rose in cost to an average of £30.3m in 2014, as local government increasingly focussed on ‘more sophisticated’ deals – research suggests.

A study by business process outsourcing provider arvato and NelsonHall shows the average value of local government outsourcing deals has risen by 15% year-on-year.

Some 60% of all council contracts signed in 2014 were extensions, renewals or replacement of previous outsourcing agreements, climbing significantly from 37% in the previous year.

The total cost of local government contracts signed in 2014 reached £606m, with a 60/40% split between business process outsourcing and IT outsourcing deals respectively. The value of revenues and benefits contracts rose from £15m in 2013 to £87m.

Analysis revealed 11% of contracts suppliers agreed to fund transformation projects that would reduce service costs, in comparison to 9% in 2013. Commitments to local job creation were seen in a quarter of deals made outside London, up from 10%.

Further findings show 67% of public sector customer service contracts were multi-channel, providing services such as web chat and social media management.

Debra Maxwell, managing director of arvato UK, said: ‘The new research illustrates that local government organisations are increasingly realising the benefits of outsourcing for themselves and their citizens. The fact that the majority of contracts signed in 2014 involved second generation agreements shows that outsourcing is working and helps councils up and down the country to deal with current challenges.

‘Local government has long been at the forefront of UK outsourcing and our 2014 review shows that local authorities are increasingly focusing on securing more sophisticated deals. Digital is now a key part of customer services contracts, showing that authorities are utilising their outsourcing partnerships to really transform services and deliver channel shift.’