This essay was originally written April 2012, but has had certain changes made since. While it has a bit of an 'information service' focus, most of it is applicable for any organisation.
This essay will examine why outsourcing and what problems and benefits it may have for an information service manager. It will first describe and explain the concept of outsourcing, before looking at some areas that maybe outsourced within a library and information service. Then benefits and problems will be looked at, before concluding that outsourcing may or may not make sense depending on the specific situation.
Outsourcing has multiple potential definitions, with varying features. Here are four from various sources (emphasis and US spelling in originals):
“Outsourcing describes a company's purchase of products or services from an outside supplier rather than having the same work performed by its own employees.” (Matsuoka-Motley, 2011)
“entrusting to an external entity the task of performing an activity that was performed erstwhile in-house” (Varadarajan, 2009).
“an outside company's provision of the products or services associated with a major function or activity of a user organization” (Bryce & Useem, 1998).
“purchasing, from an outside source, of goods and services, that an organization previously produced or provided for itself” (Shirk, 1994).
Each of these definitions has a problem though. Matsuoka-Motley's (2011) and Shirk's (1994) both discuss purchasing, but, as discussed by Varadarajan, (2009), money may not directly, or even indirectly, change hands. The problem with Bryce & Useem's (1998) use of “company's” is also discussed by Varadarajan (2009). The use of the phrase “major function” is also problematic for Bryce & Useem's definition – it could hardly be said that janitorial work is a major function of a library, but this is a service that is often outsourced (American Library Association, n.d.). The use of a time aspect, as by Shirk (1994) and Varadarajan, (2009) is also a problem. It leads to the argument that if a service was never conducted in-house, then it is not outsourcing (mentioned by Sweetland (2001)). So, if a new service is introduced in a library, staffed from the start by external staff, these definitions would say that the service is not outsourced. Varadarajan, 2009 argues that 'outsourcing' is not generally used to describe the provisioning of services (etc.) that have traditionally been sourced externally.1 Sweetland (2001) provides other definitions from different sources.
It can be seen that defining the term is difficult. However, for the purposes of this work, outsourcing does not need to be defined exactly. A definition that encompasses those above (but still has problems) is “where an organisation uses an external provider or vendor for products, goods, services or activities, instead of in-house staff”.
There are many different services that could potentially be outsourced by an organisation. These include both “non-core” and “core” services. For a library or other information service, non-core services may include: cleaning and maintenance, IT services (such as email hosting, web design and hosting), personal recruiting, accounting, and others (Ball & Earl, 2002). While, core services that maybe outsourced include: collections development (including selection, purchasing, cataloguing, barcoding etc.), book binding/repair (maintenance), and document delivery (Boss, 1998).
Any sort of task that is highly standardised and routine maybe a good candidate to be outsourced (Shirk, 1994). Boss (1998), and Shirk (1994) discuss some other services that could potentially be outsourced.2
Depending on the service being outsourced, and the reasons behind the outsourcing, there maybe various benefits to outsourcing.
May be cheaper3 (Boss, 1998; Johnston, 1996; Shirk, 1994).
May allow organisations to benefit from up to date technology, without having to invest directly (Bryce & Useem, 1998).
Allows access to expertise not available internally (Boss, 1998; Bryce & Useem, 1998; Shirk, 1994).
Can free employees from tedious tasks (Maurer, 1995 as cited in Matsuoka-Motley, 2011).
May allow the organisation to respond more flexibly to changing situations (Shirk, 1994). If workloads in certain areas are either unpredictable, or cyclical, then an organisation may benefit from outsourcing these tasks (Alexander & Young, 1996; Boss, 1998). Allows dealing with an unpredictable temporary work overload (Wallace, 1997).
Allows focusing on core competencies, which can lead to greater productivity and success (Boss, 1998; Shirk, 1994).
It maybe quicker, for certain tasks, to use an external provider, than to complete a task internally (Boss, 1998; Sweetland, 2001). Outsourcing can save time (Johnston, 1996).
Other benefits also exist, and are discussed in the articles referenced above, and in other sources.
While there are various potential benefits to both an outsourcing organisation, and to the manager responsible for outsourcing, there are also various potential problems.
If a contract is not written carefully, or if the reasons for outsourcing (and thus the expected results) are not clearly understood, outsourcing may prove expensive, or otherwise problematic, for the organisation (Shirk, 1994).
Suppliers/providers may have quality, efficiency or other problems (Sweetland, 2001).
Suppliers/providers may not wish to work with organisations as individuals, but rather wish to provide “cookie-cutter” approaches (Shirk, 1994), this could mean that the service is not exactly right for the outsourcing organisation.
May lead to loss of internal expertise and/or staff demoralisation (Buchanan, 1993 as cited in Shirk, 1994).
Lock-in to a particular vendor, or technology may make it impossible or expensive to switch to an alternative. This long term interdependency can limit freedom for the organisation (Alexander & Young, 1996; Renaud, 1997; Shirk, 1994).
Outsourcing material selection has the potential to lead to homogenised libraries that do not include alternative material (Wallace, 1997; Willett, 1998).
Willett (1998) also lists some other “hidden consequences” of outsourcing selection and cataloguing, including relating to staffing moral, and general socio-political consequences.
Other problems may exist. Within a library context, Wallace (1997) discusses issues around outsourcing materials selection. Shirk (1994) and Barthélemy & Adsit (1993) discusses potential problems from a more general perspective (e.g. relating to confidentiality).
Outsourcing has the potential for benefits,and the potential for problems for the outsourcing organisation. It also has the potential for positives and negatives for staff, clients and others.
The, perhaps, most obvious benefit is that outsourcing may save an organisation money. However, without a clear understanding of the costs involved, before outsourcing, it is not possible to know if outsourcing will actually save money. An investigation may well uncover inefficiencies, that when removed make outsourcing unnecessary (Boss, 1998). Sweetland (2001), suggests that without this investigation, “any problems which were supposedly solved by outsourcing may have been related to poor management in general”. The fact remains, moreover, that poor management can result in failure, even if outsourcing occurs. Perhaps if a manager simply does not understand what is required.
Successful outsourcing relies on a number of things. Interactions between the outsourcing organisation, and the organisation providing the outsourced services needs to be smooth and transparent. Miscommunication, whether between individuals, or incompatible computer systems, can cause problems. To be successful, the interaction between the two organisations needs to be seamless (Renaud, 1997; Shirk, 1994). Strong communication within the organisation is also important (Shirk, 1994).
Just because outsourcing is an option, does not mean it is a good option for particular circumstances. As with other decisions, careful planning and investigation made need to take place. Particularly for long-term or expensive projects. After the decision to outsource, the decision then needs to be made as to which vendor or provider will be chosen for what tasks. Contracts needs to be written clearly, and include all expectations of the organisation. It needs to have no parts which may be open to interpretation, and should have an exit option. As part of the investigation and planning process, the organisation should brainstorm various potential problems that may occur, and examine the literature for similar cases.
As well as the articles references above, some useful articles (library and information service related) include Blecic, Hollander, & Lanier, (1999), Wallace (1997), (Dunkle, (1996) and Fischer, Lugg, & Boese (2004). Barthélemy & Adsit (1993 and McIvor (2008) provide more general (not information service specific) advice.
Whether or not outsourcing is appropriate for a particular situation is not something that can be answered without a clear understanding of what is intended to be the result of the outsourcing, the costs involved, and other related issues. Obviously outsourcing has the potential to be of benefit to an information service (whether it be a library, or other organisation), but it also has the potential to cause more problems than it can solve. The reason that outsourcing is popular and favoured is because, if done correctly, the positives will out-weigh the negatives.
Alexander, M., & Young, D. (1996). Outsourcing: Where’s the value? Long Range Planning, 29(5), 728–730. doi:10.1016/0024-6301(96)00069-6
American Library Association. (n.d.). Outsourcing and Privatization. Outsourcing and Privatization | American Library Association. Retrieved April 4, 2012, from http://www.ala.org/tools/outsourcing
Ball, D., & Earl, C. (2002). Outsourcing and Externalisation Current Practice in UK Libraries, Museums and Archives. Journal of Librarianship and Information Science, 34(4), 197–206. doi:10.1177/096100060203400403
Barthélemy, J., & Adsit, D. (1993). The Seven Deadly Sins of Outsourcing. The Academy of Management Executive, 17(2), 87–100.
Blecic, D. D., Hollander, S., & Lanier, D. (1999). Collection development and outsourcing in academic health sciences libraries: a survey of current practices. Bulletin of the Medical Library Association, 87(2), 178–186.
Boss, R. W. (1998). Guide to Outsourcing in Libraries. Library technology reports, 34(5), 559.
Bryce, D. J., & Useem, M. (1998). The impact of corporate outsourcing on company value. European Management Journal, 16(6), 635–643. doi:10.1016/S0263-2373(98)00040-1
Dunkle, C. B. (1996). Outsourcing the catalog department: A meditation inspired by the business and library literature. The Journal of Academic Librarianship, 22(1), 33–44. doi:10.1016/S0099-1333(96)90032-4
Fischer, R., Lugg, R., & Boese, K. C. (2004). Cataloging: how to take a business approach. Bottom Line: Managing Library Finances, The, 17(2), 50–54. doi:10.1108/08880450410536062
Johnston, J. L. (1996). Outsourcing: New Name for an Old Practice. Law Library Journal, 88, 128.
Matsuoka-Motley, N. (2011). Librarian as Commodity: Outsourcing in Japanese Academic Libraries. The Journal of Academic Librarianship, 37(3), 273–277. doi:10.1016/j.acalib.2011.03.001
McIvor, R. (2008). What is the right outsourcing strategy for your process? European Management Journal, 26(1), 24–34. doi:10.1016/j.emj.2007.08.008
Renaud, R. (1997). Learning to compete: Competition, outsourcing, and academic libraries. The Journal of Academic Librarianship, 23(2), 85–90. doi:10.1016/S0099-1333(97)90003-3
Shirk, G. M. (1994). Outsourced library technical services: The bookseller’s perspective. Library Acquisitions: Practice & Theory, 18(4), 383–395. doi:10.1016/0364-6408(94)90046-9
Sweetland, J. H. (2001). Outsourcing library technical services – what we think we know, and don’t know. Bottom Line: Managing Library Finances, The, 14(3), 164–176. doi:10.1108/EUM0000000005744
Varadarajan, R. (2009). Outsourcing: Think more expansively. Journal of Business Research, 62(11), 1165–1172. doi:10.1016/j.jbusres.2008.09.006
Wallace, P. D. (1997). Outsourcing book selection in public and school libraries. Collection Building, 16(4), 160–166. doi:10.1108/01604959710187679
Willett, C. (1998). Consider the source: a case against outsourcing materials selection in academic libraries. Collection Building, 17(2), 91–95. doi:10.1108/01604959810212589
1Two services that are typically “outsourced”, though it is not normally thought of as such, are electricity and water production and delivery. Organisations to which these are essential make sure to have backup generators and water tanks. In a library context, libraries in the USA have 'traditionally' purchased Library of Congress catalog cards, and then MARC records for various sources (Johnston, 1996; Dunkle, 1996; Wallace, 1997).
2In some cases, the entire operation of the library is outsourced by the body responsible for the library (e.g. the local council or a law firm) (Boss, 1998; Blecic, Hollander, & Lanier, 1999).
3One reason outsourcing maybe cheaper is that the external provider, can be specialised, which may allow for economies of scale and greater in-depth training and innovation. Costs may also be spread around a number of customers (Alexander & Young, 1996; McIvor, 2008; Shirk, 1994). If a service (e.g. specialist cataloguing) or tool is only needed a few times a year, it maybe cheaper to outsource at these times, rather than to have the tools, knowledge etc. in-house all year round, and not used most of the time (Boss, 1998).