Public Services Outsourcing

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Outsourcing > Best Practices > Public Services Outsourcing

Public Services Outsourcing
Shane Milroy, Australia, Member
Given 35 years of both private and public sector experience, I am very cautious of embracing outsourcing as a panacea for reducing costs and increasing performance in public services. As experience has shown, when governments outsource public works to the private sector in key areas of infrastructure such as public transport, electricity and other public utilities, the results are almost standard. Performance decreases and costs increase. Basically this is due to the difference in culture - Private enterprises id financially driven to make a profit, whereas, the public sector in the main is a normative based environment whose business is to provide a certain level of service in return for taxes imposed. Once the two areas are mixed, the result generally ends up the same - Reduced services for the public as the private operator plays catch-up in service standards, increased costs, and infrastructure.

Outsourcing in Public Sector
Ted Garrison, Management Consultant, United States, Member
I'm not presumptuous to disagree with Shane, because in Australia it may be different. US government makes it more expensive because it's less efficient. All organizations should perform their core activities, but they should consider outsourcing everything else.
The purpose of outsourcing is for innovation. Innovation creates the savings and improves performance. Non core activities generally don't provide innovation, because not where the expertise is. Agree with Shane about performance decline in the private sector if they have total control. Business will provide the most profitable service formula. US airlines are a perfect example - they have seriously reduced service to increase profits. The answer is to establish performance standards that must be met. We do that with safety for example - Why not other performance criteria.competition manages cost.

Public Service Outsourcing
Oscar Umeh, Strategy Consultant, Nigeria, Member
Shane, you are correct, outsourcing public work from the public to the private sector rapes the entire value creation benefits of outsourcing, reason like you rightly pointed out is that both sectors are operating on two diametrically opposed business culture - Profit and non-profit.
Outsourcing is thus a welcome development when it is carried out within the private sector because of the common business culture that runs through the sector.

Outsourcing Services to Public Sector
Borje Vickberg
There is an almost religious perspective of ones view on these matters. Either you are "pro" or "con" and whatever your view is you are labeled. Politically. Scientifically the matter is worth a discussion.
In Sweden we have a public dental sector. We have achieved the World Health Organisation objective of dental health for the year 2010 ten years before expected.
However, the rest of the world does not know about this and in my country it is not politically correct to acknowledge this situation.
A sideeffect of this success may well be an increase in dental decay among the less fortunate part of the population. That has been the case in other countries.

Outsourcing Public Services
D P BABU, Strategy Consultant, India, Member
Your anwer on this question depends on the evolution of societies, culture and economy of the country/province leading to various governance ideologies like socialistic, capitalistic and democratic. Outsourcing public services is an ideology far from the socialistic pattern, however if other ingredients of the economy are enough strong, it can be.

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