Outsourcing Could Help Colleges Hold Down Costs

New report:

• New White Paper examines the state of outsourcing in higher education.
• Starting point for dialogue on outsourcing as a means of holding down college costs.

Washington, D.C.,Sept., 19, 2005—A major new white paper is among the first to explore outsourcing as part of the solution to the rising costs of a higher education. The paper notes that few universities have an outsourcing vision or strategy, but suggests that the extent to which outsourcing can and will be used is a question that will influence ongoing debates about controlling college costs.

The report, “Is Outsourcing Part of the Solution to the Higher Education Cost Dilemma?” was produced by the Washington, DC-based Institute for Higher Education Policy and written by Institute Senior Associate Ron Phipps and President Jamie Merisotis. Merisotis said, “Outsourcing is part of the unexplored territory of the debate over college costs, and we should look at it as a possible component of a broader strategy to keep costs as low as possible.”

The authors found outsourcing already in place and successful in American colleges and universities for functions such as bookstores and food services. But, according to the report, colleges and universities have one major management concern about outsourcing that is not typically an issue for other organizations. That concern is about the potential loss of identity, community, and collegiality associated with many university services and programs.

The report also examines in detail those barriers to outsourcing that might deter colleges and universities from outsourcing a particular function. These criteria include:

• the outsourced function would have to benefit or at least not harm, virtually all of the constituencies of the institution (no harm would come to the personnel affected);
• the outsourced function would have to be at least equal in cost, but with better service;
• if the cost was less, the service would have to be at least equal to that previously provided; and
• the organization proposing to outsource a function would have to submit to a lengthy proposal process of up to a year.

The paper calls for more research on the topic and also explores a number of other key questions including:

• What are the benefits and limitations of outsourcing?
• Is outsourcing used as an effective management tool in American colleges and universities?
• And does the higher education community see outsourcing as a way to reduce cost and/or improve quality?