Outsourcing Governance Research Articles

Administrative Justice in the Modern Mixed Administrative State: Moving Beyond Taxonomies

Abstract The challenges that government outsourcing presents for administrative law were the topic of considerable scholarly discussion in the 1990s and early 2000s, with broad agreement amongst public lawyers that outsourcing should not result in a loss of the particular kind of accountability with which administrative justice is concerned. Yet, over the past two decades, while government outsourcing has continued and evolved, very little has been done to address these challenges. This article explores the question of when non-court-based administrative justice accountability mechanisms ought to extend to outsourced government functions. I argue that much of the focus of administrative lawyers to date has been on the approaches that courts should take, which has led governments and legislatures to adopt tests and taxonomies largely developed in or for the courts, which distinguish between ‘public’ and ‘private’ functions. I show that these taxonomies are not well adapted to administrative justice mechanisms outside of the courts, are not fit for purpose in many modern government outsourcing arrangements and have resulted in significant accountability gaps. I propose a different starting point for thinking about administrative justice in the modern mixed administrative state, based on normative principles as opposed to categories.

Assessing the Financial Vulnerability of Not-for-Profit Organisations in the Australian Aged Care Sector

This study addresses the measurement of financial vulnerability (FV) of aged care non-profit organisations (NFPs) in Australia by creating a revised multi-dimensional framework and the development of an FV index and FV scores. In addition to its methodological contribution, the study assesses the extent of FV faced by aged care NFPs, using annual reporting data collected from 200 organisations in the period from 2017 to 2019. The results suggest aged care NFPs hold a limited capacity to withstand financial shocks and provide an alarming message on the high level of FV risks faced by all NFPs. This study contributes to the literature in several ways: (1) by examining the conceptual and empirical disjuncture among the dimensions developed for measuring financial health in the NFP sector; (2) by providing evidence to the limited literature on measuring the extent of FV in the NFP sector, especially as related to the Australian aged care sector; and (3) by extending the literature on the risk associated with outsourcing public sector service delivery. Consequently, the study provides new insights to allow the Australian government to identify potential risks associated with outsourced government service delivery.

Formal and relational governance of artificial intelligence outsourcing

Outsourcing emerging technologies such as Artificial Intelligence (AI) are expected to impact organisations significantly, due to a tight labour market for AI expertise. However, how formal and relational governance effects Information Systems suppliers who provide AI services has not been studied. Based on an exploratory research amongst eight suppliers and two market research advisors, we conducted 18 expert interviews and found evidence how formal contractual and relational governance affects AI outsourcing. The results indicate various forms of contractual models in which some cater for clients’ needs specifically, e.g. outcome-based, experience-driven Service Level Agreements (SLAs). Our examination provides insights that formal and relational Information Systems (IS) outsourcing governance are complementary in cases where clients and suppliers co-develop AI. For our research, we adapted the outsourcing governance model of Lioliou et al. (Inf Syst J 24:503–535, 2014), including their emphasis on the psychological contract. We contribute to IS outsourcing literature by exploring, beyond contract management insights, differences between suppliers in providing AI services. Our study acknowledges that AI outsourcing shift the emphasis from a transactional type of arrangement to a relational type of outsourcing arrangement. In addition, the combination of both formal and relational governance mechanisms positively contributes to IS governance. Our study also confirms that the innovative character of AI positively contributes to the psychological contract in outsourcing AI.

Charities & Discrimination: Is Charity Law Always a Better Solution than Public Policy?

Abstract Discrimination by charities raises questions about the appropriate extent of equality regulation and has implications for government outsourcing through charities and for the provision of tax concessions. Professor Parachin has recently provided a justification for denying the application of public equality norms to charities through the public policy test of charity law. This paper builds on that work by considering whether liberal societies might, however, have good grounds to apply public equality norms to charities in circumstances such as the provision of outsourced government services, state enforcement of egoistic giving, or where doing so is a proportionate means to prevent harm.

Outsourcing and local government

Outsourcing and local government

Bilateral, Collective, or Both? Formal Governance and Performance in Multisourcing

While multisourcing offers benefits such as access to best-of-breed resources and enhanced competition, it also presents clients with a new governance challenge, namely the need to ensure that vendors not only deliver their individual contributions but also collaborate to produce a coherent joint outcome. Clients can address this challenge by combining bilateral governance focused on each vendor’s individual performance with collective governance aimed at the vendors’ joint performance. However, it is unclear how the simultaneous application of bilateral and collective governance affects multisourcing performance. Indeed, the literature falls short in systematically differentiating these governance mechanisms and empirically examining their interplay. Drawing on existing work on multisourcing and on the outsourcing governance literature, we argue that bilateral and collective governance direct efforts toward different performance dimensions (individual vs. joint), invoke different metaphors (market vs. team), and promote conflicting norms (competitive vs. cooperative), which can result in trade-offs when bilateral and collective governance mechanisms are combined. Results from a survey of 189 multisourcing arrangements support our expectation that bilateral and collective governance promote different performance dimensions. Notably, one collective governance mechanism, conflict management procedures, contributes to both individual and joint performance. We find substitutional effects between bilateral and collective governance in relation to joint performance but not individual performance, indicating that the benefits of collective governance for joint performance are more easily compromised than the benefits of bilateral governance for individual performance. We also observe complementary effects within collective governance mechanisms. Our key contribution lies in theorizing and empirically examining the effects and interplay of bilateral and collective governance in multisourcing.

Outsourcers’ control mechanisms, vendors’ contract schemas, and project performance in cross-border IT outsourcing: A vendor’s perspective

Relational conflicts are likely to occur in cross-border IT outsourcing between partners with different cultural backgrounds. Extant literature diverges on the role of contract and trust as control mechanisms in managing relational conflicts. Prior studies have examined the effectiveness of the control mechanisms primarily from the outsourcer’s perspective, with little consideration of how vendors interpret outsourcers’ control mechanisms. Based on psychological contract theory, this study addresses the effects of contract-based and trust-based control mechanisms on relational conflicts from the vendor’s perspective and further explores the contingency of the effects on vendors’ psychological contract schemas (transactional contract schema and relational contract schema) towards their relationships with outsourcers. Based on survey data from 180 offshore outsourcing IT projects, the results show that vendors’ transactional contract schema reduces the effect of trust-based control whereas vendors’ relational contract schema strengthens the effect of outsourcers’ contract-based control on relational conflict. Relational conflicts, in turn, exhibit a negative impact on project performance. The findings offer new insights into the role of outsourcers’ contract-based control and trust-based controls in relationship management from a vender’s perspective. The findings also extend the outsourcing governance literature by illustrating the contingency of the control mechanisms on vendors’ psychological contract schemas.

Outsourcing to Not-for-Profits: Can Judicial Enforcement of Charity Law Provide Accountability for the Performance of ‘Public’ Functions?

Governments increasingly rely on charities to provide services on behalf of government. Decisions on outsourced functions can relate to the distribution of public resources, such as the provision of housing, education or legal assistance. Accordingly, such decisions can be contentious and outsourcing potentially places that contention in the private sphere rather than the public sphere. This article examines the extent to which outsourcing service delivery to charities affects the ability of current or potential service recipients to hold decision-makers accountable. It argues that outsourcing government functions to charities will often place such functions beyond the scope of public law judicial review. However, charity law contains accountability mechanisms that have the potential to fill the gap. These mechanisms are identified and then compared with the availability of judicial review for government decisions by reference to scope, grounds, standing, time limits and remedies. This article finds that in many circumstances there should be no diminution of legal accountability. Nevertheless, charity law is less tested than administrative law, is not as effective in dealing with service decisions made by front line employees and does not as readily guarantee procedural fairness. Balanced against this, charity law may provide more generous time limits and better enable systemic issues to be addressed.

Does Outsourcing Improve or Weaken Administrative Justice? A Review of the Evidence

This paper examines the impact of outsourcing on administrative justice in UK public services. It examines a number of case-studies concerning the performance of private contractors in the delivery of public services and the degree to which they have been able to ensure administrative justice. It is not possible to provide a single, overall answer as to whether outsourcing improves or weakens administrative justice. The possibilities and limitations of outsourcing, and its impact on administrative justice, need to be carefully considered in light of the particular governmental function, the policy context, and the capabilities of both private contractors and government. The quality of administrative justice provided through outsourced government is influenced by various factors: the scale and organisational complexity of public services; the professional knowledge required to administer them; the mechanisms by which government rewards contractors; the capability of government to monitor contractors; the focus given to the needs and perspectives of users; and the balance between values such as cost-efficiency and administrative justice norms.

Assessing the Financial Reserves of Social Service Charities Involved in Public Service Delivery

Delivering services in partnership with government is commonly considered a source of financial stability for charities and other nonprofits. However, in liberal welfare states, government funding may also heighten financial risks, where it exposes charities to competition, austerity, and rising service demand. In these contexts, publicly funded charities’ capacity to withstand financial shock is an important consideration in implementing sustainable government programs. To deepen knowledge about the factors contributing to financial capacity among charities receiving government funding, this article analyzes the financial reserves of 4,542 Australian charities engaged by government to deliver social welfare services. Logistic regression shows how younger charities, larger charities, and those with high dependence on government funding have lower odds of holding adequate reserves, indicating poorer short-term financial capacity. The findings draw attention to potential risks associated with outsourced government service delivery, while highlighting which charities most need to strengthen their financial capacity.

Governance of Financial Services Outsourcing: Managing Misconduct and Third-Party Risks

With financial institutions increasingly outsourcing their activities, they face a record number of fraud and misconduct cases arising from third-party services. We survey financial institutions to better understand which governance mechanisms may improve the monitoring and management of third-party relationships. Overall, our results suggest that there are gaps in traditional governance arrangements. We find that financial institutions rely mainly on internal monitoring to detect fraud and that whistleblowing plays an important role in mitigating misconduct risks. Finally, we report evidence that vendor dependency and product complexity play a pronounced role in delaying termination of agreements.

The impact of R&D sourcing strategies on basic and developmental R&D in emerging economies

PurposeThe purpose of this paper is to investigate the impact of R&D sourcing strategies and their governance modes on basic and developmental R&D. Following the concept of cognitive distance, this research proposes that there are trade-offs between basic and developmental R&D when emerging economy firms engage in different R&D sourcing strategies. R&D sourcing can enable emerging economy firms to access different level of heterogeneity of knowledge inputs depending on the cognitive distance between the firm and its suppliers. Distance in cognition increases when firms obtain knowledge from abroad and independent suppliers in comparison to the acquisition of knowledge from home boundaries and affiliates.Design/methodology/approachTobit maximum likelihood estimation approach is used.FindingsUsing data from Turkish firms, this study finds out that offshore R&D with an outsourcing governance mode affects basic R&D. In contrast, domestic R&D with an insourcing mode influences developmental R&D.Originality/valueThis research extends recent efforts to better understand the determinants of different R&D types by examining offshore and domestic R&D together and by taking into account different governance modes of each R&D sourcing strategy. This study becomes important because it investigates this issue from the perspective of emerging economy firms.

The Outsourcing Governance Organization: Building a Better Contract Relationship

This research paper examines the role of an internal organization to manage contractual and relationship governance in organizations that outsource IT and related services. The research uses a case method approach to understand how the internal outsourcing governance organization can reduce risk in an outsourcing arrangement by creating a Centre of Excellence that provides consistent practices for managing outsourcing contracts and relationships. The Outsourcing Governance Office (OGO) is a Centre of Excellence that is focused on supporting the challenge of managing multiple complex external service relationships. As suggested by researchers and industry advisors, the OGO can help the larger organization improve its outsourcing capability and to reduce outsourcing risk. This case study analysis of a Canadian provincial government OGO finds that risk can be reduced but not entirely mitigated by the OGO.

A Comparison of Academic and Practitioner Conceptualizations of IT Outsourcing Governance

This paper aims to improve understanding of the IT Outsourcing Governance domain by conducting a study that elicits differences between academics and practitioners in terms of their respective conc...

Lessons for Effective Government IT Outsourcing

Information technology (IT) tends to be viewed as ancillary to core government functions. Consequently, IT is often outsourced to the private sector. Unfortunately, there is a long line of failed outsourced projects. This article uses two New Zealand case studies, the particularly public failure of the recent school payroll system and the successful introduction of electronic immigration processing, to examine how the design and governance of outsourced government IT projects could be improved. It concludes that an awareness of historic trends is important for project success, that governments need to be more active in combating market based transaction costs and that contract management becomes a core government competency when projects are outsourced. It also argues that better change management and cognisance of design-reality gaps would positively impact the outcomes of future projects.

Youth and their workers: the interacting subjectification effects of neoliberal social policy and NGO practice frameworks

ABSTRACTThe effects of neoliberalism on young people and youth workers through outsourcing government services has attracted critique from multiple sources. Post-structural analysis interrogates subjectification effects of these policies on youth. However, this kind of analysis of the governmental formation of youth ought to consider the interaction between the knowledge of youth underpinning neoliberal social policy, and those employed by non-government agencies implementing them. The interaction between these two shape the reciprocal governing activity within the young person and youth worker power–knowledge relationship that, this paper will argue, is an important factor in the critique of neoliberal social policy. Young people are governed by a diverse array of knowledges developed by government, youth studies, NGOs and young people themselves. These knowledges interact, reinforce and contradict discourses of youth work. This paper focuses on a neoliberal social policy (FLO) which constructs youth as a surplus population in need of risk management, and youth workers as the producers of young workers. Furthermore, I will consider the interfering subjectification effects produced by an intake and assessment tool (Your Story) utilised by a non-government FLO provider. These discourses underpinning Your Story and FLO render young people and their workers as relational beings or economic citizens respectively.

Outsourcing governance: states and the politics of a ‘global value chain world’

ABSTRACTPolitics, and by extension states, are marginal in debates about the genesis, evolution and functioning of the global value chain (GVC)-based global economy. We contend here that the core complexity of state agency and state power needs to be much more carefully understood in GVC and related debates, as a basis on which the governance of the evolving GVC world can be properly theorised as revolving around the inseparability of economic and political power. We advance a framework for understanding the role of politics and states in the construction and maintenance of a GVC world, using a three-fold typology of facilitative, regulatory and distributive forms of governance, and propose a notion of ‘outsourcing governance’ as an attempt to capture the ways in which states purposefully, through active political agency, have engaged in a process of delegating a variety of governance functions and authority to private actors. Our overarching argument is normative: ‘outsourced governance’ of the form we currently observe is associated with regressive distributional outcomes, and is antithetical to an inclusive and sustainable global economy.

Governance structure in IT outsourcing: a network perspective

Purpose– The governance of information technology outsourcing (ITO) has been identified as an essential determinant for ITO success. Prior studies have shed light on effective governance structures in different organizational contexts. This study aims to advance this prior knowledge by exploring how interpersonal networks, as an important aspect of such context, reflect and influence ITO governance.Design/methodology/approach– A single case study was conducted from a vendor’s perspective in an ITO dyad. Social network analysis was leveraged to reveal the interpersonal networks, with whole-network analysis on 24 team members in an ITO vendor company. In addition, open-ended interviews with six selected team members were utilized to identify the perceived governance structure.Findings– The findings of this study suggest certain features of interpersonal networks, i.e. network density and cross-network comparison, can reflect governance structure in multiple aspects. Meanwhile, the authors also argue that interpersonal networks can influence the form of governance structure.Research limitations/implications– As a single case study, the context of the research site cannot be ignored in the inference of findings. To increase the confidence for further generalization, future empirical studies are needed especially in contrasting sites, such as ITO relations based on network governance.Originality/value– This study associates intra-organizational characteristics of the vendor to the inter-organizational governance structure of the ITO relationship. It also provides an innovative methodology for both researchers and practitioners to assess ITO governance structure.

Contracting Out the Last-Mile of Service Delivery: Subsidized Food Distribution in Indonesia

Outsourcing government service provision to private firms can improve efficiency and reduce rents, but there are risks that non-contractible quality will decline and that reform could be blocked by vested interests exactly where potential gains are greatest. We examine these issues by conducting a randomized field experiment in 572 Indonesian localities in which a procurement process was introduced that allowed citizens to bid to take over the implementation of a subsidized rice distribution program. This led 17 percent of treated locations to switch distributors. Introducing the possibility of outsourcing led to a 4.6 percent reduction in the markup paid by households. Quality did not suffer and, if anything, households reported the quality of the rice improved. Bidding committees may have avoided quality problems by choosing bidders who had relevant experience as traders, even if they proposed slightly higher prices. Mandating higher levels of competition by encouraging additional bidders further reduced prices. We document offsetting effects of having high rents at baseline: when the initial price charged was high and when baseline satisfaction levels were low, entry was higher and committees were more likely to replace the status quo distributor; but, incumbents measured to be more dishonest on an experimental measure of cheating were also more likely to block the outsourcing process. We find no effect on price or quality of providing information about program functioning without the opportunity to privatize, implying that the observed effect was not solely due to increased transparency. On net, the results suggest that contracting out has the potential to improve performance, though the magnitude of the effects may be partially muted due to push back from powerful elites.

REALIZING LEGAL PROTECTION FOR OUTSOURCING WORKERS THROUGH EMPLOYMENT SETTING SYNCHRONIZATION

Debating on the outsourcing existence in Law No.13 of 2003 regarding to Labor, is still continuing even though there has been a decision of Indonesia Constitutional Court (MK) who stated the rules that the content of Article 65 paragraph (7) and Article 66 paragraph (2) has been outlawed. The problems of this research are: How is the outsourcing concept of regulating in the labor law and the regulation of the labor minister No. 19 of 2012; and What effort to keep the outsourcing arrangement can provide legal protection for workers? This research use juridical normative method. The research finds that some of the concept is in contradiction with the 1945 constitution and another Law which is related to the protection of labor, and even with the other articles that exists in the Labor Law itself so thats the norm contains contradictio adconceptio. Therefore, the system of outsourcing that will be regulated should consider the principles of goof outsourcing governance. They are: legal protection, non-discrimination, worker as the subject not as an object, benefit and welfare, sustainable working relation, and the shifting of protection to the labor. Keywords: Law Protection, Outsourcing setting, synchronization