NRI Papers
No.136 November 1, 2008
  Towards the Growth of Japan's Public Support Service Market
— Challenges and Activities to Innovate Public Services— 
 
Ryoichi ISHII
   The public support service (undertakings outsourced by the national and local governments) market is projected to grow remarkably, reaching a size of ¥ 5.4 trillion in fiscal 2012. The development of this market is significant in that the innovation of public services can be achieved by changing service providers and improving the quality of services and the ability of employees.
   The advantages of developing the public support service market include enabling concentrated use of the resources of local governments for their core functions, improving the quality of public services, increasing the efficiency of public services, developing human resources engaged in public services and contributing to regional economies.
   While outsourcing offers these advantages, the number of private-sector companies participating in this market is currently limited. The issues hindering the active participation of private-sector companies include: (1) lack of skills on the part of local governments ordering such services, (2) inadequate understanding of the need for continued business operations by support service companies, (3) ambiguities and inconsistencies in systems applied to outsourcing, (4) lack of mechanisms addressing treatment of employees when outsourcing takes place and (5) inadequate understanding of the advantages brought about by outsourcing.
   Local governments that outsource services hold the key to the development of a sound public support service market. A government-wide approach is necessary for local governments to strategically promote outsourcing, rather than limiting such activities only to certain services or some departments/bureaus, by assigning a person exclusively responsible for outsourcing.
   Coordination by the national government of the different systems and procedures adopted by each local government and the preparation of a standard set of guidelines by the national government can facilitate the development of the public support service market. On the part of private-sector companies, actions should be taken to publicize their activities in order to gain a greater understanding of local governments and citizens, and to ensure compliance with laws and regulations.
Contents
I Japan's Public Support Service Market to Amount to ¥ 5.4 Trillion
II Significance of Developing the Public Support Service Market
III Advantages of Developing the Public Support Service Market
IV Issues to Overcome in Developing the Public Support Service Market
V Activities Necessary to Develop the Public Support Service Market

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