Sept. 20, 2005

Potential (and Limits) of Outsourcing

Outsourcing is a growing trend in higher education, but concerns about control over quality and a “loss of identity, community, culture and collegiality” may limit its use as a tool to cut colleges’ costs (and in turn their prices), says a new report.

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The report by the Institute for Higher Education Policy, “Is Outsourcing Part of the Solution to the Higher Education Cost Dilemma: A Preliminary Examination,” is just that: a review of the relatively small amount of existing information about the extent to which colleges and universities turn to outside vendors to do tasks traditionally done by employees.

It finds (based in part on surveys done by the National Association for College and University Business Officers and other groups) that most colleges have turned to private entities to perform at least one function, in areas such as bookstores, food services and technology, and that the use of outsourcing is on the rise.

But the study also emphasizes the significant barriers that exist to outsourcing any areas at the core of what higher education does: teaching, research and public service. In addition to the concerns that exist about outsourcing in any setting — lack of control, possible declines in quality and customer satisfaction, and blows to employee morale — college and university officials are particularly wary of perceived damage to the sense of institutional culture and community, the report says.

Colleges and universities simply have different ways of getting things done than businesses,” it says.

“In addition to encouraging, indeed mandating, a consensus approach to decision making, the protection of shared governance and academic freedom is paramount. In short, a major barrier to outsourcing in higher education is the very essence of the organization.”

Still, the report encourages colleges and policy makers to continue to explore outsourcing, or at least collaboration with outside vendors, as a potential avenue to help institutions of higher education rein in costs and find more efficient ways of managing certain tasks.

— Doug Lederman

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