Outsourcing Of Public Services Research Articles

Service Outsourcing and Government Fiscal Conditions: Do Market Competition, Bureaucrat Support, and Management Capacity Matter?

Scholars have long regarded government fiscal stress as a crucial factor driving public service outsourcing; however, further investigation is still needed to determine whether service outsourcing in turn helps governments improve fiscal conditions. Public choice theory suggests that outsourcing services can lead to efficiency improvement and cost savings. Nevertheless, transaction costs theory implies that the costs associated with service outsourcing may offset or even outweigh its potential benefits. Moreover, the extent of transaction costs depends on contextual factors such as market competition, bureaucrat support, and government management capacity. Empirically, we employ an instrumental variable estimation approach to examine the impact of service outsourcing on the budget balances and debt levels of U.S. municipalities. We find that service outsourcing improves government fiscal conditions, with contextual factors playing an important role in moderating this effect. Additionally, outsourcing services to different types of contractors has varying implications for government fiscal conditions.

Public Provision in Democratic Societies

If we hope to see values of equality and democracy embodied in our societies’ institutions, then we have a range of good reasons to favor expansive public provision of goods and services, and to oppose many forms of privatization. While Joseph Heath is right to argue that there are at least some forms of ‘anodyne privatization’, and while he is also right to argue for a more nuanced philosophical debate about the different dimensions of choice between forms of public and private provision, Heath fails to register various regards in which private provision can undermine these central public values. We often have strong egalitarian and democratic reasons to protect zones of decommodification; to resist the imposition of user-charges; and to favor insourcing and direct public procurement over various forms of outsourcing of public services. Public libraries provide a totemic illustration of some of the deep virtues of collective public provision in democratic societies. Overall, our reasons to reject privatization are stronger and more diverse than theorists such as Heath might have supposed.

Outsourcing in the Public Sector and Its Negative Effects on Service Delivery in Zambia

Abstract The 21st century has seen the public sector in Africa adopting the strategy of outsourcing so that public resources can be distributed using market mechanisms. However, the involvement of the private sector in the delivery of public goods and services has been associated with poor performance. Therefore, the purpose of this paper is to examine the nature of outsourcing in the public sector, and its negative effects on service delivery in Zambia. In Zambia, outsourcing of public goods and services has mainly assumed four forms: 1) joint venture, 2) supply, 3) build-operate-transfer, and 4) management contracts. The paper argues that, the outsourcing of public goods and services in Zambia has resulted in overpriced goods and services, non-delivery of paid for goods and services, delays in the delivery of goods and services, delivery of substandard goods and services, and manipulation of procedures. The paper asserts that, these negative effects are as a result of the desire by non-state actors (mainly private companies), engaged by the Zambian government to deliver public goods and services, to maximise their profits. Consequently, outsourcing of public goods and services in Zambia does not benefit the public and government.

Local institutions and public service outsourcing: Managerial professionalism, mayoral strength, and electoral rules

AbstractThis research examines how institutional contexts matter for US municipalities' service outsourcing decisions, deriving data from the ICMA's multiple rounds of surveys concerning local institutions and service delivery choices. We focus on seven pivotal local institutions that address managerial professionalism, mayoral strength, and electoral rules. Moreover, a composite index measuring the general nature of the municipal structure on a political–administrative scale is constructed based on the local institutions examined. The empirical estimations use the existence of initiatives and popular referenda allowing citizen voters to adjust local statutes as instrumental variables for local institutions. We find that municipalities with a council‐manager municipal form, a professional manager, a weak mayor, and nonpartisan and at‐large elections of council members outsource less services. Professional managers can moderate the effects of contextual factors on government outsourcing decisions. Moreover, municipalities with a more political or a less administrative municipal structure outsource a larger portion of services.

The Quality and Efficiency of Public and Private Firms: Evidence from Ambulance Services

Abstract Economic theory predicts that outsourcing public services to private firms reduces costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in Stockholm County, Sweden, a setting where patients are as good as randomly assigned to ambulances with different ownership status. We find that private ambulances reduce costs and perform better on contracted measures such as response time, but perform worse on noncontracted measures such as mortality. In fact, a patient has a 1.4% higher risk of death within three years if a private ambulance is dispatched (in aggregate, 420 more deaths each year). We also present evidence of the mechanism at work, suggesting that private firms cut costs at the expense of ambulance staff quality.

Accounting for Outsourcing of Non-Core Services in Tanzania Public Sector: The Perception of Managers

The purpose of this paper was to explore the opinions of managers regarding the motives behind outsourcing practices in the public sector. Specifically, this paper intended to understand whether managers consider outsourcing as a cost-serving strategy, a strategy to focus on core competencies and or a strategy for enhancing the quality of service delivery. Interviews were conducted with thirty-two (32) public sector managers and fifteen (15) managers from private sectors that were purposefully selected. The results have shown that outsourcing decisions are necessary for complementing knowledge, skill and competence gaps in public service delivery. The managers’ opinions have indicated that outsourcing enables the public sector to focus on their respective core competencies in order to enhance their performances. Moreover, outsourcing decisions reduces operational costs and improves the quality of service delivery in the public sector. The findings imply that decision makers consider outsourcing as a tool to bring about economic, efficiency, effectiveness and equitable service delivery to the public in Tanzania. The limitations of this study are that the data collected from interviews could limit the generalization of the findings because the managers’ opinions may not necessarily be objective hence the results can be largely subjective. The paper recommends that future researchers can think of using a large sample and or analyze outsourcing in public sector services from risk-based perspectives.

Совершенствование механизма предоставления государственных и муниципальных услуг в Российской Федерации на основе передового мирового опыта

The aim of the work is to substantiate proposals for improving the mechanism of production and provision of state (municipal) services in the Russian Federation. The research method consists in a critical rethinking of the world experience in organizing production and providing consumers with state and municipal services. The practice of public services is analyzed, the ranking of countries by the level of development of the e-government and the assessment of the quality of state (municipal) administration for the period 2016–2019 are presented. The analysis of world experience made it possible to substantiate the main directions of improving the system of providing state (municipal) services in the Russian Federation. The research results can be used by federal, regional, municipal authorities, public organizations. The novelty of the research is made up of institutional, administrative-legal and organizational-economic proposals for improving the mechanism for the provision of state (municipal) services in the Russian Federation. In modern conditions, the drivers of the intensification of the mechanism of public services in the Russian Federation are the development of electronic services by expanding the range of municipal services, as well as expanding the outsourcing of public (municipal) services.

Tariff structuring in water and sanitation: public profiting arrangements on universalization initiatives

Abstract Water and sanitation service access is a global problem, impacting disproportionally poor communities of low-income countries. Failed universalization initiatives highlighted historical negligence, social inequality, and bad governance. Infrastructure developments require large investments, which most local governments cannot afford. Alternative funding might come from private investors through cost-effective project finance arrangements. Public services should be sustainable, conciliating users' willingness to pay with providers' willingness to supply. Governments have implemented profit-driven strategies over taxing outsourced public services to increase budget inflow. Inefficient tax schemes on essential public services have damaged universalization initiatives in developing countries. These negative taxing practices have damaged tariff structure, service sustainability, and project attractiveness. The public sector should not profit from unsustainable outsourced services that are required but they cannot supply. Water and sanitation expansions on low-income communities in developing countries should not take place as tariff-free schemes, but within a tax-exempt policy.

Outsourcing Public Services to the Social Services System

Goals and objectives . The article is devoted to the issue of modernizing the Russian sphere of providing public social services to the population with a social service system using outsourcing technology. The problems inherent in traditional industry of the distribution of social order for the production of social services are highlighted. Approaches to the introduction of outsourcing technology into the provision of public services in the social services sector of the population have been analyzed. Methods. The study used a set of general scientific methods, such as analysis, synthesis, generalization, comparison, system-functional and integrated approach. Within the framework of the stated theme, theoretical provisions and modern approaches have been organized by studying the works of various authors, regulatory documents and official statistics. The theoretical and practical significance of the study is to flesh out and organize modern strategic approaches of Russian state policy in the sphere of providing public services to the population with a social service system. This area of state social policy has not yet been sufficiently researched by the national science. The analysis provides an opportunity to reveal the extent of the solution to the problem of introducing outsourcing technology into the Russian practice of social services at the present stage, actualizes the importance of public policy on the development of public-private partnership in the provision of social services to the population. The results highlight the advantages and weaknesses of new approaches in the provision of public services based on outsourcing technology, which may further develop public policy in the provision of public services and social services. Results and conclusions . The article presents the results of a study of The Russian State Policy on the provision of public social services to the population. The peculiarities of the organization of the provision of public services by the system of social services on the basis of outsourcing technology are shown, and opportunities for developing partnership with SONKO in this direction are considered. The weak and strong sides of the state social policy to modernize the delivery of public social services have been revealed. Conclusions have been drawn on ways to improve the introduction of outsourcing technology into the practice of social services.

Brief history of the implementation of Empresa Brasileira de Serviços Hospitalares in Hospital Universitário Onofre Lopes and its impacts for the world of work.

The State is crucial to the intensification of precarious work in the contemporary scene. The main objective of this article is to analyze evidence on the intensification of job insecurity in Brazilian university hospitals after the transfer of their management to Empresa Brasileira de Serviços Hospitalares, specifically at Hospital Universitário Onofre Lopes, linked to Universidade Federal do Rio Grande do Norte, locus of our research. We are guided by the method of interpreting critical dialectical reality, because we understand that events in the world of men must be explained through history and because we understand that social reality is dynamic, contradictory, and impermanent. This research is bibliographic and empirical, since we refer to bibliographic studies by authors who discuss the central categories of our analyses: State, capitalism, and precarious work. We also conducted in-person qualitative interviews with 12 workers at Hospital Universitário Onofre Lopes and with a public servant who works at the university campus of Universidade Federal do Rio Grande do Norte, totaling 13 interviews, analyzed using the content analysis technique. The interpretation of our research data revealed the tendency of the State to break the stability of civil servants through public service outsourcing as a way to intensify job insecurity and to make the targeting of public budget towards financial capital more flexible, to the detriment of investments in social policy, such as health policy.

Quality and Efficiency Between Public and Private Firms: Evidence From Ambulance Services

Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances of different ownership statuses. We find that privately owned ambulances are better at responding to contracted quality measures but perform worse on noncontracted measures, such as mortality. In fact, a randomly allocated patient has a significantly higher risk of death if a private ambulance is dispatched. We also present suggestive evidence on the mechanism, supporting that private firms cost innovate at the expense of ambulance staff quality.

Service outsourcing decisions – a process framework

PurposeThe purpose of this paper is to compare service outsourcing decisions between public and private organizations and against a theoretical decision-making framework to both understand differences across the sectors and to provide an outsourcing framework more suitable specifically for outsourcing (and for the public sector).Design/methodology/approachMultiple case studies, i.e. a study of phenomena (here outsourcing process) at various sites is used as an approach.FindingsFindings indicate that public sector organizations are trailing behind private sector organizations in how the decision-making process is conducted and resourced. The authors suggest regular evaluation of service functions internally as a starting point for the outsourcing service decision-making process. Additionally, the market analysis should be done prior to cost analysis and benchmarking as the availability of suppliers more qualified than the internal process defines the make or buy decision.Research limitations/implicationsThe newly developed framework based on empirical evidence includes the following phases: regular evaluation of service functions, market analysis, cost analysis and benchmarking and evaluating relevant service activities. Applying the framework improves the efficient delivery of outsourced public services and brings public sector outsourcing closer to the professionalism currently present in the private sector.Originality/valueChoosing between in-house and outsourced service delivery is a fundamental decision in both private and public sector organizations. Previous outsourcing research has mostly focused on the private sector, with limited focus on the public sector’s outsourcing processes, yet understanding of the service outsourcing process is important in ensuring organizational competitiveness and cost efficiency.

Selecting a Public Service Outsourcer Based on the Improved ELECTRE II Method with Unknown Weight Information under a Double Hierarchy Hesitant Linguistic Environment

In present-day society, government public service outsourcing has become an irreversible trend due to the gradually increasing public pursuit of service quality and efficiency. To better meet the needs of the public and effectively improve the quality of service, it has been a crucial issue for government departments to choose the most desirable one from a series of public service outsourcers (PSOs) with distinct characteristics. In this paper, to deal with such decision problems, we propose the improved elimination and choice translating reality (ELECTRE) II method with unknown weight information under the double hierarchy hesitant fuzzy linguistic (DHHFL) environment to accurately and effectively select the best PSO. Firstly, aiming at the shortcomings of the original comparison method for double hierarchy hesitant fuzzy linguistic elements (DHHFLEs), we define the hesitant deviation degree (HDD) for DHHFLEs and, based on this, further propose a new comparison method for comparing DHHFLEs more reasonably. Secondly, inspired by the classical power average (PA) operator proposed by Yager, a new method is introduced to determine the weights of experts with respect to each attribute, based on the support degree between attributes. Afterwards, an improved ELECTRE II method is proposed to address the problem of PSO selection. A numerical case about e-government outsourcer selection is given to demonstrate the enforceability of the method. Finally, comparisons between previous methods and our method are carried out to illustrate the effectiveness and strengths of the proposed method.

Examining the Effectiveness of Current Information Laws and Implementation Practices for Accountability of Outsourced Public Services

Abstract Recent events linked to outsourcing such as the Grenfell Tower disaster in June 2017 and the collapse of Carillion in 2018 have again highlighted the challenges of maintaining democratic accountability of government expenditure where public services are contracted out to private companies. Although not the only focus of policy debate, pressure is building from both parliamentarians and the Information Regulator to extend UK information laws to the rapidly expanding number of private companies holding major public sector contracts. However, there remains a lack of evidence as to the nature and extent of this accountability gap and the implications for legislative reform. This article presents findings on non-compliance from a comprehensive field experiment using Freedom of Information requests on the Private Finance Initiative model of outsourcing. We demonstrate the limits of Freedom of Information as a tool for accountability and argue both legislative and regulatory reform are needed to enable proper public scrutiny of outsourced public services.

Inter-organizational Control in the Outsourcing of Public Services

Inter-organizational Control in the Outsourcing of Public Services

Sustainability of Public Services: Is Outsourcing the Answer?

The outsourcing of public services has acquired a prominent position in the political agenda of many countries in recent decades. This paper contributes an analysis of the outsourcing of a public service under a theoretical framework based on a multitask principal-agent model. For the management of the service, a contract is assumed that includes certain incentives to the contractor linked to the outcomes in two types of activities: the first related to cost saving, and the second related to the improvement of the quality of the service. The main results of the paper show, in the first place, the conditions under which the outsourcing of a public service is economically unfeasible. Additionally, the paper shows that, under perfect information conditions, the optimal incentives include the contractor retaining all the cost savings. On the contrary, under conditions of asymmetric information on the quality of the service, the contract should stipulate a certain distribution of the cost savings between the public authority and the contractor. More in general, the formalization of the model presented in this work can contribute to a better understanding of the role of the contracts, and therefore to their improvement.

Monitoring arrangements for outsourced public services: the importance of service characteristics for the distribution of oversight responsibilities

The research question guiding this article is which factors explain monitoring arrangements for outsourced public services. The article first investigates the independent impact of asset specificity and measurement difficulty on monitoring arrangements for a range of oversight tasks commonly used to hold vendors accountable. Secondly, this study includes high transaction costs as an explanatory variable in models that explain the use of two types of proxy monitoring arrangements as compared to direct government oversight. A unique dataset of outsourced Florida municipal services is analyzed using two-stage Heckman selection models, ordered logistic regression, and multinomial estimation. A key finding indicates that for services where multiple transaction costs characteristics are observed simultaneously (high transaction costs services), oversight arrangements are different. When these services are outsourced, vendors and third-party monitors are more likely to perform certain monitoring tasks when compared to government officials. This research contributes to the vast and expanding literature on local governments’ service delivery by outlining how compounding of services’ production transaction costs can lead to a complex myriad of oversight strategies.

Public service outsourcing: the implications of ‘known unknowns’ and ‘unknown unknowns’ for accountability and policy-making

ABSTRACTOutsourcing is difficult to define and trickier to measure. Despite transparency and procurement requirements, there are no comprehensive datasets detailing the extent to which English councils have contracted-out service provision. This lack of information, coupled with austerity pressures, has probably increased the number of ‘known unknowns’ and ‘unknown unknowns’ about the efficacy of this service delivery model. Such developments have significant implications for accountability, risk management and policy-making.

Outsourcing Public Services: Contractibility, Cost, and Quality

AbstractWe review the literature on public sector outsourcing to explore if the theoretical predictions from the incomplete contracts literature hold up to recent empirical evidence. Guided by theory, we arrange services according to the type and magnitude of their contractibility problems. The empirical studies point at rather favourable outsourcing outcomes, in terms of costs and quality, for services without severe contracting problems. The picture is more mixed for services with tougher contracting problems, with the weight of the evidence in favour of public provision. This difference between services is largely in line with the property-rights framework and theories of incomplete contracts.

Outsourcing and insourcing of organizational activities: the role of outsourcing process mechanisms

ABSTRACTThe decision to outsource organizational activities is studied widely, but research on the insourcing of outsourced activities is scarce. We study the outsourcing decision as a process, and investigate the influences of organizational mechanisms on its sustainability. We argue that organizational learning from the outsourcing decision process could over time result in competencies that enhance the sustainability of outsourcing decisions. We examine outsourcing and insourcing processes longitudinally. The results indicate that the outsourcing process mechanisms, especially the mechanisms associated with implementing the outsourcing decision, predict insourcing. We discuss the implications for future research on outsourcing and insourcing of public services.