Outsourcing at Colleges Pros and Cons

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The outsourcing movement is not a new trend in the U.S. economy. Some industries, like the health care sector or Corporate America, have been doing it for decades. Others, including higher education, were not that quick to jump in.

Declining enrollment rate, tuition increases, government funding cutbacks, workforce, and infrastructure aging caused school administrations to have a closer look at privatization. Like any other business strategy, it has its pros and cons colleges and universities have to consider.

Reasons to Say ‘Yes’ to Outsourcing

Recent years have seen rising concerns about the accountability of the services provided by education institutions. Anticipating a possible decline in revenue flow, more and more colleges and universities start to embrace the benefits of outsourcing.

Cost Reduction

Commitment to contain the rise of tuition fees forces public educational institutions to seek new opportunities to cut their expenses. This has spurred the interest in forming public-private partnerships (P3).

Contracting a vendor rather than managing the same operations in-house helps colleges to keep their costs in check. Education institutions perceive such perks through:

  • effective process management arising from contractors’ expertise in the field;
  • better service delivery due to advanced industry practices and new technologies brought by outside providers;
  • transferring employee costs such as compensation, training, insurance, and retirement benefits to the other party.

Core Mission in Focus

The primary goal of the educational institution is to provide students with up-to-date instructions, great faculty, and networking possibilities. Outsourcing allows colleges to focus on the things they do best.

Contracting out food service and bookstore operations is a long-term practice at many schools across the country. U.S. colleges also tend to outsource endowment fund management (41%), legal services (28%), housekeeping (25%), laundry (20%), security (17%), facility maintenance (9%).

A recent survey shows that institutions are interested in partnering in other areas as well. These include the development of campus infrastructure (53%), improving current assets (41%), student housing (39%), predictive analytics (31%).

It’s not just the schools that are reaping the benefits of outsourcing. Students also tend to offload some of their tasks, such as research, paper editing, and digital presentation preparation. Those who struggle with written assignments can check to keep up with the curriculum.

Broader Perspectives

Privatization reduces the need for capital investments on the college side. It’s often the vendor who is in charge of purchasing modern equipment, upgrading systems, and bringing qualified workers to campus. This way, higher education institutions can test new amenities and services and compare different alternatives without draining their own resources.

Drawbacks of the Practice

Despite the apparent advantages, there are still many concerns regarding the viability of outsourcing in higher education. Several decision factors can pose an obstacle to introducing this practice. Let’s have a closer look at some of them:

Loss of Control

Under P3 agreements, colleges can still define the results they want to achieve, but they don’t have that much control over the outsourced operations. It’s because institutions pass on to the contractor not only the task but management functions as well.

The inability of the school administration to maintain control over the contracting activity may cause a shift in quality-price balance. Vendors can decrease their performance to meet revenue goals. It may also happen the other way round. Outside providers might be forced to increase the cost to retain the same level of service. Either way, it can harm students and college staff’s customer experience.

Limited Organizational Knowledge

External personnel may not fully understand the core mission of higher education institutions. Schools are not only centers of teaching and learning. They carry out many public purposes such as socialization, promotion of cultural diversity and equality, career and health counseling. They also play a major role in shaping students’ identities. These values may be somewhat inconsistent with the business’ pursuit of profit.

Colleges and universities should look for contractors who can build their activity in line with the academy’s culture. Outside employees should become an organic part of established organizational dynamics. Otherwise, higher ed institutions may be in danger of losing their unique sense of community and collegiality.

Employee Matters

Outsourcing the task that used to be performed by the in-house team is likely to cause resistance from college stuff and labor unions. Institutions can mitigate the negative impact of such decisions by bringing this issue to the negotiation table with their potential partners. The P3 contract can be designed in a way that vendor is obliged to hire or at least interview current college personnel.

Another possible solution is to outsource only management positions for a defined period. Existing staff will be able to stay at college while receiving continuing training from experts in the field. Outside professionals also help college departments to reorganize their operations and set the direction for further development.