HR Green ASD for Local Governments Handbook - Executive Summary - Manual (Page 6)

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CHAPTER 2: OUTSOURCING-CONTRACTING OUT
Alicia Schatteman
Definition: Outsourcing is the concept of taking internal organizational functions and paying an outside firm
to handle them. Outsourcing is done to save money, improve quality, obtain specialized services and
expertise, or free organizational resources for other activities. Outsourcing was first done in the data-
processing industry and has spread to nearly all areas of the service, manufacturing and public sectors. The
document that governs that transfer is often written in the form of a contract, an oral or written legally
binding agreement between two or more parties.
Why consider Contracting or Outsourcing?
• It was clear from our case studies that outsourcing required both elected officials and management to
consider this idea.
• It could be one or the other party that initiated the idea but consideration of outsourcing was done
by both elected and appointed officials.
• The time dedicated to consideration could be a short time frame (everyone agrees to move forward
quickly) or it could take long depending on the organization’s culture of innovation and risk.
• The figure below demonstrates the typical pattern to move outsourcing from an idea through to
being entrenched fully into an organization’s structure and culture.
Figure 1:
Consideration
Decision
Implementation Evaluation
Expansion and
Capacity
Investment
OBSTACLES