Outsourcing: A Flexible Option for the Future?

Series: IES Reports (No. 320)
The nature, extent, and likely future of outsourcing in the United Kingdom was examined through an extensive literature review and interviews with small numbers of local authorities, companies, and contractors. Despite the limited data available, it appeared that outsourcing is concentrated in ancillary activities and is relatively marginal, both as a proportion of the work force and in terms of its organizational impact. Among the reasons cited for outsourcing were the following: cost, improved service, desire to focus on core business and reduce exposure, and flexibility to meet fluctuating supply and demand. The problems encountered by organizations resorting to outsourcing have stemmed from choosing outsourcing for the wrong reasons and preparing for it poorly. The following were identified as alternatives to outsourcing: changing the organization's overall shape/size; introducing more flexible work arrangements; and altering the means of structuring service provision. Special attention was paid to the best ways of planning and managing outsourcing, use of outsourcing by local governments, and effects of outsourcing on employees. It was concluded that continued pressures to reduce costs and maximize productivity will likely mean the continuation of partial and selective outsourcing, with clients becoming more sophisticated and demanding in what they expect from contractors. (Contains 98 references.) (MN)