I suspect they are having to revert to having applications processed away from Sheffield because of overload?
A lot of contracts are being offered for government services, to reduce the cost to the taxpayers e.g. government staff (salaries, pensions, retiring early for whatever reason costs) sick days etc; buildings for government staff (cost of providing and maintaining the buildings they work in) etc.
Sital won this contract in 2017(?). From Kate's link
"Contact us
You can contact our international contact service provided by Sitel UK who work in partnership with UKVI."https://www.gov.uk/government/publications/usa-apply-for-a-uk-visa/apply-for-a-uk-visa-in-the-usa#contact-usand
https://www.sitel.com/news_item/sitel-group-awarded-contract-deliver-uk-visa-international-domestic-customer-service-operations/The welfare reforms has reduced these staffing and building costs too. Before, thousands of councils all over the UK, and the DWP (in various places over the country) and HMRC, dealt with various income based benefits. If we were going the other way, taking it from one department and giving it to thousand of offices across the UK, people would think we were mad! Plus now, claimants report changes to their claim on their online account and they can see this proof, whereas before, if the staff failed to act on these reported changes, the claimant had to request a copy of the telephone call to prove they did tell the staff.
More government provided jobs (or contracted out jobs) are meant to be moving out of London too, if they don't need to be in London. For decades now, UK government jobs have also been moved to areas to provide work in areas of high employment. NI has gained the most jobs from this policy, with Scotland not far behind NI. It's why Wales asked for all the govenment jobs in Scotland to be moved to Wales, if Scotland voted to leave.