Outsourcing in the Public Sector: a VfM perspective

Public sector outsourcing is the process of contracting out a service or a function to another body, such as street cleaning or internal IT services. While outsourcing is frequently understood to mean contracting out to the private sector, services and functions can also be outsourced from one public body to another public body or to a non-profit making organisation.

This paper examines the evidence on outsourcing through the framework of Value for Money (VFM). This framework allows for the consideration and analysis of evidence through focusing on three main criteria, Economy, Efficiency and Effectiveness.

It highlights the complexity of decision-making on outsourcing and argues that the merits and risks of contracting-out should be assessed in a comprehensive way.

Used to aid decision-making on activities, projects and policies the paper argues that the VFM methodology allows the reviewer to take a balanced approach to such assessments. By not prioritising one criterion over another, VFM promotes a whole of economy and society approach.

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