A wry smile crossed my face when recently asked the question “what’s the difference between shared services and outsourcing”. I wanted to say that shared services are about pooling resource and working towards a common goal. That’s the theory, but the reality is that the two terms are becoming synonymous. Particularly so, as some of our best shared services transfer to transactional customer-supplier relationships and charges and subscriptions supplant grants and top-slices. The truth today is that the term “shared services” is often deployed as a softer, more acceptable euphemistic term for outsourcing.
There are many reasons why universities outsource. Few will be won over solely by economies of scale: VAT and relatively small contract size diminishes some of the larger cost savings. Instead, most universities are attracted by greater cost certainty; better reliability, specialisation, increased breadth and quality of service as well as the resilience offered by a larger delivery team.
Of course, outsourcing isn’t for everyone. Some feel it implies a loss of control and there are some principled and vocal opponents who object on ideological grounds suggesting it undermines the integrity of an institution. The response has to be to get the balance right: to outsource those things that make sense and to award contracts on the right mix of criteria be it price, environmental metrics, ethical work practices or quality credentials.
One part of this mix is to consider the motivations behind the service provider. Is it “for profit”, or “not for profit”. If it’s the latter then what strategic objectives does it have? What does success look like? Another key consideration is whether to source from outside the sector or from within, a term I originally coined as “insectoring” but quickly replaced with “co-sectoring” when colleagues pointed out entomological inferences!
Ultimately we are all charities for the good of education. Any surpluses that our sector services make therefore goes back into what we’re all collectively here to do and not line the pockets of shareholders. I’m not suggesting that we choose co-sector services blindly. They have to fit the requirements and meet the same high standards. However, I would like to be more confident that co-sector services aren’t deliberately shunned because they lack a polished marketing spiel or are considered through a jaded political prejudice or outdated lens.
I would also like to think that our sector doesn’t lose sight of the common good. Let’s take Jisc for example. Previously funded through a HEFCE top-slice, universities are now being invited to fund it directly. There is still economy of scale and critical mass but there is also a sense of scope attrition as universities question “what’s in it for me” when it comes to Jisc’s common-good activities such as research, lobbying and horizon scanning. Alturism is fading fast as universities increasingly need to consider their bottom lines. Previous Jisc innovations have included eduroam; federated authentication; network security monitoring and filtering not to mention risk sharing when taking on new technologies such as open-source software. None of these would have been achieved without the common-good investment of the sector. Future innovations of their ilk could be jeopardised if we only consider these services in a transactional way.
UCAS and now HESA are also gearing up to commercially exploit their data to generate income and drive future investment. Many of their customers will come from outside the sector which begs the question of mission creep and how these organisations can balance the needs of all stakeholders going forward, especially when demand changes and sustainability becomes the primary focus.
This situation is not dissimilar to that at the University of London in the 1990s when it was felt that the federal services were no longer serving the needs of the member Colleges. The systems hadn’t kept pace with the increased need for management information and they were focussed on domestic undergraduate students whereas, for some Colleges, this only accounted for a quarter of their student profile.
With the advent of direct funding and financial independence, some of the University’s Colleges broke away from the centralised systems and the University of London’s services had to re-invent themselves as service providers to a wider set of customers. Significant and continued investment was made and today, the University’s Careers Group supports over 120 institutions and its two data centres host over 300 institutions and 2.5 million students. This is evidence that co-sector service-providers can re-invent themselves and remain successful without undermining their core values and purpose.
The University of London’s example is also evidence that institutions are now far more comfortable with externally sourcing their services. There was a time when outsourcing was limited to catering, maintenance and security but it is now reasonably common for universities to outsource or co-sector aspects of ICT, HR, Finance and Registry. For example: desktop and out of hours ICT support; internal audit; procurement; travel; payroll; pensions advice; tax advice; student recruitment/conversion; counselling; and employability.
Despite the rhetoric from the Canute like ideologues, the realist in me would suggest that outsourcing and co-sectoring are here to stay. However, universities won’t buy co-sector services unless they meet quality, price and other expectations. I wouldn’t want it any other way. My only concern is that co-sector services are judged fairly, with an open mind and that we don’t lose sight of our common charitable objects.