When visiting schools, I am often asked about outsourcing and if it’s something a school should do (more of). Outsourcing is a concept that’s been around for far longer than the modern-day Business School mantra suggests. A recent visit to the Cutty Sark in Greenwich reminded me that outsourcing transport has been around for many years, but what issues does outsourcing raise for a Head Teacher or School Business Manager?
Outsourcing Cost vs Benefit
The most cited benefit of outsourcing is, naturally enough cost. However sometimes there is more than the cost benefit:
- Expertise: In a world where regulations, best practices and technology changed regularly it can be hard to be up to date with something that isn’t your core function. Outsourcing functions can mean that you have greater expertise available, and more up to date expertise.
- Risk: Using experts can reduce the risk of something going wrong and more to the point, reduce the cost of fixing that something as your outsourcing partner should be liable for their mistakes.
- Headcount: Removing people from the head count is often what drives outsourcing in a large business, as well as saving money. Saving money is normally far more important in the schools sector. Either way it’s important to understand what the person (people) are doing, before their roles are outsourced.
- Space: Employing less people saves on space. This can often free up a substantial area for an alternate use. Desk space is the obvious, but supporting cupboards, filing, IT requirements all quickly add up. In one case this released a room which became a new (desperately needed) meeting room. What would you do with additional space?
Outsourcing and value for money.
The driving point in successful outsourcing is to create value for money. What does value for money represent in your case? To obtain value for money it’s important to carefully consider the costs and benefits.
It’s easy to only consider a lower price and even if your outsourcing cuts the cost (don’t forget to calculate HR and management time) it may still not represent the best value for money!
Outsourcing – is it out of fashion now?
You’ve probably heard of some of the large-scale outsourcing stories, and how they’ve created problems. Some of the names that hit the headlines include Capita, SERCO, parts of the probation service and more. In fact, you might wonder if outsourcing is still “fashionable” or even sensible.
There are many (smaller scale) examples outsourcing being created in the education section as you read this. These are working well, saving the school management time and money.
One of the common flaws is not fully understanding what is being outsourced. This is especially the case in large and complex programmes but can also affect small ones.
Where outsourcing can go wrong
If you aren’t absolutely certain that everything that you were previously doing is going to be provided by your external supplier, problems start to occur.
What are the extra jobs being done by your existing internal team? Will the outsourcers do everything that’s currently being done (within the stated budget)? This is often something that’s overlooked, leading to cost overruns or (even worse) and realisation that something hasn’t been done for the last six months.
With the best intention in the world you may go for a service provider you believe is offering you everything you need; but they either cannot or will not do what you thought you were paying for.
A tip to ensure your outsourcing works well
It is important to ensure that everything you think a service provider will do is what they will do – before you sign them up. If they cannot do what you need, it probably doesn’t represent value for money for your school or Trust.
Having a suitable framework to ensure that all requirements are covered is key and we can help with selecting a suitable framework for the service required.
Outsourcing – When it’s worth it
Stopping doing things that are not your core expertise, which can be done more effectively and more cheaply by an outside provider makes a lot of sense. Examples can vary from:
- Cleaning
- Payroll
- The finance department
- Financial Management (well I had to say that didn’t I)
These may sound like small scale examples, but they work well and can save your school money; so they can make a lot of sense. What would you outsource in your school, if you were sure you understood it?
We help Schools and Academies with their financial management, see the results of good practices (and hear about less good practices). If you would like to discuss how to improve financial management in your school, please call. In the last few weeks we have been able to give good schools ideas simply by talking, visiting, or as part of a paid project.
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