Outsourcing

Question 1

Outsourcing definition

Answer 1

Hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the companies own employees

Question 2

Government Outsourcing

Answer 2

In recent years there has been strong growth in the number of private sector businesses that are used to provide services e.g. the running of prisons and social care homes might be out-sourced by central and local government to private sector often after a tendering and bidding process has been held. This is known as contracting-out.

Question 3

Tendering

Answer 3

A bidding process by private firms for the outsourcing contract

Question 4

Advantages of government outsourcing

3

Answer 4

Competition & tendering will result in lower labour costs (as they’re profit maximisers) thus save taxpayer money

Work will be faster, these firms are specialised in their field. Gov can also fine if deadlines aren’t met

Private sector typically much less hierarchical than public sector, which leads to better innovation & lower costs

Question 5

Disadvantages of Government Outsourcing

Answer 5

Outsourcing firms may sacrifice quality of service to meet deadlines to prevent fines

Outsourcing requires proper monitoring and regulation, which in itself involves extra spending

Doubts about some employment practices of service companies e.g. low wages, poor conditions