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Governmental Outsourcing: Should We Encourage Or Stop?

16 min read

While it has been around for centuries and saw a huge explosion in the 1980s, government outsourcing has become a huge topic of debate, and rightly so. How the government spends its money and attempts to increase the services it offers needs to be discussed. After all, it is coming out of the taxpayer’s pockets. What’s more, there has been a trend of recurring budget crises at almost every single level of government, and that makes the topic of government outsourcing a frequently-discussed area.

However, a lot of the time, these discussions don’t leave us knowing any more than we did, to begin with. The waters remained just as murky, and the pros and cons remain just as contested as they did before people locked horns and debated for or against.

As such, we have come up with a few real-life examples that we hope will help you understand why governments propose outsourcing as a valid alternative, as well as help you understand which services are most likely to be outsourced and where this decision has turned out to be the wrong decision.



Outsourcing Can Be Used To Solve Budgeting Issues

You may not know this, or ever think it is possible, but across the United States of America, there have been instances where small cities have had to declare themselves bankrupt. We know this is shocking. What is also shocking is that California is the most affected state in this area. But the reason this has happened tens – if not hundreds – of times is because municipalities are no longer able to run their cities in the way they used to, and this is for numerous reasons. There just isn’t the means to generate the same amount of money in taxes or revenue as there once was. As such, public services have had to cut their overheads. These include downsizing their employee numbers, moving more toward automated systems that are overseen and ran by computers, and, of course, outsourcing certain tasks and responsibilities. The latter is not a bad alternative to going down.

Yes, there is more bureaucracy involved than in the private sector, but the reasons for going down this route are no different. If a business is struggling or needs to boost its profit margins, a great way of doing this is to outsource. This allows them to upscale and downsizes when they need to. It allows them to call on specialists and experts to perform certain roles to a higher standard. It increases efficiency and quality and it reduces the risks. These same benefits apply to local governmental services. It allows them to address the problem of high costs while also amending the issue of underperforming services, whatever they may be.

An Extreme Example Of A City Outsourcing

This is one of the most famous and most extreme examples of a city outsourcing its services, but the city of Maywood, which is in California, just south of Los Angeles, pretty much outsourced all of its services and, guess what, the sky didn’t fall. Basically, Maywood decided that not every town needs to have a local government, and it puts its money where its mouth was, by scaling back to just a Major, a lawyer, and a controller. Absolutely everything else they outsourced. This may seem like a risky move for a public service, but as the experts at http://cochraneng.com/our-services/civil-municipal-engineering/municipal-engineering/ explain, the town made the move for two very valid reasons; cost-control and service quality.

In short, they owed money and they were losing money, and so they had to make drastic changes if they were to prevent their city filing for bankruptcy. So they outsourced everything from the police services to street cleaners. It is a matter of contention as to whether they succeeded, but it certainly prevented them from folding.


Privatization Has Changed Since the 1980s

In the 1980s, western governments placed a serious emphasis on the privatization of certain services. Back then this meant taking those services and selling them off for a profit while maintaining shares in the service as well as having governmental representatives sat on the respective board of directors in some capacity. These days privatization doesn’t have the same face. Instead, it looks a bit more like outsourcing than it does the selling, in the sense that the government will contract relevant services to a private company and then manage those contracts. Once again, the impact of privatization is a huge area of contention, especially in the UK, where Margaret Thatcher was an aggressive privatiser.

But that doesn’t mean there weren’t elements of success. For example, the privatization of certain state-owned enterprises – including British Steel, BP, BT, British Gas and British Airways – all operated within industries where private business was well-developed and eating into the successes of the government-run alternatives. These days, especially in the USA, outsourcing is aiding the government in its abilities to increase revenue and thus improve the services it offers. The most notable areas are the prison system, police services, military support and educational facilities.

An Obvious Example Of Outsourcing Failure

The 2012 Olympics hosted by the great city of London is one of the most cited and most obvious failures in outsourcing history. What happened was, the government’s Olympic committee decided to outsource all of its security needs to G4S. G4S is a multi-billion dollar company that operates worldwide and, as such, it was no surprise that they won the contract. However, the contract stated that they would need to train and manage almost 15,000 security personnel to ensure the Olympic Games ran smoothly and was secure. Then, two weeks before the opening ceremony, G4S informed the government that it was going to fall short by around 6,000 security guards. As such, the government had to use police officers and members of the armed forces to ensure they were able to deliver the needs of the security strategy.

The Games were a success, and remain the most secure public event in British history, but there was still a huge lesson to be learned, and that is the importance of not outsourcing tasks of such a huge magnitude. It was a good thing that there had been no total-outsourcing agreement in place that would have seen new and untrained staff completely responsible for the safety and security of the Olympics and that the government was able to plug the gaps with publicly-owned services.

Should We Outsource Law Enforcement?

Law enforcement is one of the most basic, fundamental and important services offered by any town, city, state or nation, and that is because it protects society. However, there is a difference between policing and police enforcement as this article was written by researchers will attest https://www.thebalance.com/law-enforcement-vs-policing-974604. Police enforcement in major cities and town isn’t so much an issue where law enforcement is a high priority of almost every governing body. In fact, there are often big overlaps of these duties that see redundancies and collaborations spring up between police departments, state patrols, county sheriff’s and other law enforcement agencies, whether federally run or locally managed. However, in smaller towns and more rural areas, governments are actively pursuing innovative opportunities in which they can improve the services offered while reducing the costs that often cripple their budgets.

In this sense, it is worse outsourcing law enforcement requirements as a means of ensuring protection in both a legal sense and a financial sense. As such, a lot of local authorities outside of major cities share their services with other towns and, a lot of the time, towns in surrounding areas will outsource their policing duties to the town with the most effective sheriff’s department, allowing them to improve their offering while reducing their overheads. This money can then be used to bolster other services, such as health care, that the surrounding towns can then take advantage of.


Steer Clear Of Mega Contracts

All too often, governments get hooked on the idea of one massive contract that will fix all of their problems in a certain sphere. The reason these are so attractive is simple; they offer a solution that is easier to manage that multiple smaller contracts while being cost-effective too. But this style of outsourcing almost always fails because neither party realizes the magnitude of the task. Either the vendor can’t manage it effectively, or the task gets done to a sub-standard due to the lack of competition and resource available. This usually results in a government spending more for a poorer service.

Of course, the arguments surrounding whether local governments should outsource certain services will continue to rage on, probably for a long time yet, and no definitive answer will ever be found. But in order for governments to be successful in what they do, they must operate like a business, and that means being more productive, more efficient, more cost-efficient and more transparent. They are the qualities of all successful businesses, so why would it be any different for a public body.

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