OUTSOURCING ON TRIAL -- CAN IT EVER WORK?

The Acceptable Face of Outsourcing?

Outsourcing of a service or a function by the strategic management of a body is usually undertaken for a mixture of the following reasons -- though the list is not exhaustive;

1. The existing service\function appears to cost more to deliver than it currently costs to deliver by comparable benchmarked organisations.
2. The existing service\function does not deliver the desired quantity and quality service outputs in comparison to other benchmarked organisations
3. The existing service\function delivers the desired quality outputs but at a higher cost than it is currently delivered by comparable benchmarked organisations.
4. The existing service\function delivers poor quality outputs at a relatively high cost compared with other benchmarked organisations.
5. The culture of the internal service\function provider is inflexible and resistant to change.
6. The internal service\function wants to change and re-configure itself but there is no internal funding for it to do so - hence an external option is required.
7. Strategic management believes that the private sector provider will be inherently more efficient and creative than the in-house provider based on an ideological commitment.
8. An external provider convinces strategic management that it can do offer a better service at a more reasonable cost than the in-house provider.
9.The internal provider's effectiveness has become so diminished by cuts and redundancies that the outsourcing option is the only real opportunity for service continuity.
10. The in-house team wishes to spin away from the public sector and set up a mutual or some sort of other structure where they can become more incentivised to deliver better services at a more reasonable cost.

Points 6 and 10 are closely related to each other. Primarily the service provider is chiefly looking to reduce cots\increase revenues through outsourcing. Cost saving in reality is the main aim - there is an expectation (hope?) that service quality will be maintained. The latter point is the real challenge of the outsourcing agenda. Can we put up with the reduction in quality for the cost savings which may be achieved at the instigation of the contract. Many of these savings are illusory, because sometimes quality levels fall so low that remedial work has to be brought in to push quality levels back up. In the G4s scenario this involved bringing in the army.

But is it just the fault of the outsourcing organisation? Do the people who do the analysis on these contracts take it seriously enough in vigorously challenging the ideas and assumptions being put before them?  Do they wish to believe that outsourcing will be better when in fact there isn't that much evidence that it will.

The problems of outsourcing should not deflect from the fact that internal service and business functions should always strive to improve their own performance in straitened times -- This may involve partnering, mutuality,profit and cost sharing but not necessarily outsourcing the whole service\function.

We need to improve with the help of others but there is no need to cede total service\function control to a third party under outsourcing. We should be trying to solve our own performance problems and not passing those problems on to other organisations which are frequently less able to cope than we would be if we only had a bit of targeted support.