A comparison of outsourcing in higher education, 1998-99 and 2003-04

This paper explores the nature and extent of outsourcing by higher education institutions, benefits and challenges associated with outsourcing, and the implications of outsourcing for effective management. The principal investigator conducted a national study of outsourcing by four-year colleges and universities at two points in time, 1998-99 and 2003-04. Results indicated that vending, dining, and bookstore operations were the most frequently contracted activities. The investigators also tested the relationship between each of two institutional variables, control and Carnegie classification, and each of the outsourcing activities. Private institutions outsourced grounds maintenance and custodial services significantly more than did public institutions. Master’s institutions outsourced bookstore operations significantly more than did baccalaureate institutions. This paper explores the nature and extent of outsourcing by higher education institutions, benefits and challenges associated with outsourcing, and the implications of outsourcing for effective management. Theoretical Framework The decision to contract with an external provider for the performance of an organizational function, on the premise that the outside entity can complete the task at a cost lower than that achievable by the organization, has a long history. Manufacturing businesses likely were the first to employ this calculus of lower cost, choosing to buy, rather than to make component parts (Dominia