Outsourcing Strategies in Public Services under Budgetary Constraints: Analysing Perceptions of Public Managers

Abstract

This work aimed to study outsourcing strategies in public services and their relations with business continuity and resilience during budgetary constraints. A qualitative analysis was conducted using semi-structured interviews. This methodology was conducted with 51 public managers from the state of Pernambuco, Brazil. Findings showed that, during budget cuts periods, in the short term, due to the urgency of decision-making, it is common for outsourced services to suffer reductions or interruptions first, which directly affects public services continuity. Only a long-term view is able to correctly analyse this situation, but this does not always occur when the main factor observed is the law of fiscal responsibility. Therefore, this work brings new light to the literature concerning the problem situation, and may be useful for the planning of outsourcing strategies in public services.

Accounting for Outsourcing of Non-Core Services in Tanzania Public Sector: The Perception of Managers

“…The problem situation for this research is considered complex and social in nature because it requires subjective opinions of the individual, therefore the research was based on qualitative analysis as in Aragão and Fontana (2022). A qualitative analysis helps the researchers to deal with social processes and relationships (Vyas et al, 2018).…”

“…Basically, although it is not always, public sectors do engage in outsourcing practices to serve unnecessary costs (Joha & Janssen, 2010;Alonso et al, 2017), enhance the quality of public services delivery (Assaf et al, 2011;Cabral et al, 2013;Ikediashi et al, 2015), and or to focus on their core competences (Gunasekaran et al, 2015;Fontana et al, 2019;Aragão & Fontana, 2022). These three factors have been noted to be the main motivating factor of the public sector to outsource their non-core activities.…”

“…Generally speaking, there are many objectives of a public sector organization to adopt outsourcing strategies which include but are not limited to: firstly, enabling the contracting organizations to focus on their core competences (Gunasekaran et al, 2015;Fontana et al, 2019;Aragão & Fontana, 2022), secondly to reduce spending (reducing costs) by shifting the costs to private sector; (Domberger & Jensen, 1997;Joha & Janssen, 2010;Alonso et al, 2017), it is argued that the efforts of not-for-profit organizations to reduce cost are lower as compared to profit oriented firms (Glaeser & Shleifer, 2001). Indeed, Andersson et al (2019: p. 356), observed that "managers in non-profit firms often face weaker monetary incentives than managers in comparable for-profit firms" this means that managers in public sector may have less incentive of cost-reduction than the managers of the private sectors.…”

“…Outsourcing entails that the contacted part assumes responsibility to perform the functions under specified contractual conditions, usually the functions should be performed in a similar way as the contracting organization would perform (BOT, 2021). Outsourcing decision requires some of the activities, functions and/or processes previously performed by a particular organization to be transferred to an external part on a contractual arrangement (Aragão & Fontana, 2022). It was noted that outsourcing is intended for reducing operating costs, improving productivity, enhancing efficiency, and increasing effectiveness in Public Sector Organizations (PSOs) because outsourcing enables organizations to focus on their core competencies (Andersson et al, 2019).…”

“…Another motivation for this paper is to contribute to the limited literature on outsourcing in the public sector, especially in developing countries like Tanzania. The literature related to outsourcing in the public sector is still limited (Aragão & Fontana, 2022).…”