Sunday, November 29, 2015

The risks of outsourcing

Many government agencies are outsourcing their essential duties. This include security and policing work. This has several harmful impacts, especially if the outsourcing is done for the purpose of reducing cost.

In some countries, the government outsource certain government duties to the private sector, but they provide a minimum wage or a standard wage. So, the outsourcing is for more flexible management and not for reducing cost. When the contractor gets an adequate fee, they are able to maintain the required standard.

In Singapore, our public service appears to be outsourced for cost reduction. To compete, the contractor has to quote a low price. When they are awarded the contract, they may cut down on quality or safety.

Even if they get an adequate price, they may still cut down on quality or safety, to earn a bigger profit.

It requires considerable skill to ensure the that the expected standard is maintained when the work is outsourced to a contractor. This is usually more challenging than employing direct workers.

It is suitable to outsource work that is ad-hoc or irregular. But for regular work, it is better to use direct employees. If external expertise is needed, this can be purchased when it is needed.

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