Outsourcing of Public-Services - Forms and Limitations

Abstract

Purpose of the article is to show how public services can be outsourced from communities and what legal, organizational or other limitations may have to be taken into account.Methodology used for this article is literature research, analysis and comparison. An in-depth look into the present status of research and literature will be interconnected to the basic research in this matter that has been done from the 1970's to the 1990's.Scientific aim is to show the potential of the process as being important and helpful in creating better community-service and meanwhile relieve the communities from organizational and financial burdens that are more difficult to carry than ever before.Findings are that we have to determine between the different municipal economic activities and the legal basis of these activities. The intervening public-service is a prominent example for the restrictive regulatory system it is set in but also is seen as having a big potential for cooperation and outsourcing by contracting-out. Contrary to that the service-rendering public-service is less regulated and more open to a market approach.There are different spheres for these economic activities to take place. Different reasons for outsourcing depend on the specific sphere a certain task belongs to and can include economic, fiscal and political aspects. Two big groups of tasks are annex-tasks from within the public-service and characteristic public-services. There can be outsourcing by commissioning or by using submissions.With different legal forms of the outsourced entities and the legal limits that are set for every different kind of structure, it is clear that there is no solution that always fits all the needs and that this has to be carefully taken into account.Conclusions are that there is a high potential and big successes when outsourcing is done well planned and as a strategic activity. A number of legal issues and other limitations always has to be respected.