Private Companies

[PHILIPE]

We often hear now of something being outsourced to a private company, sometimes in respect of healthcare which is critical. I often wonder where some of these companies spring from, who runs them, what experience do they have or what qualifications available to meet demands. Anybody got any thoughts ?

 

[Busaholic]

We often hear now of something being outsourced to a private company, sometimes in respect of healthcare which is critical. I often wonder where some of these companies spring from, who runs them, what experience do they have or what qualifications available to meet demands. Anybody got any thoughts ?

Often run by someone who previously worked for the Health Authority or whatever, been made redundant with a nice pay-off and now raking it in from this racket.

 

[rdeez]

I'm generally opposed to essential public services being outsourced to private companies. The typical argument in favour goes along the lines of 'private companies can do it more efficiently (cost effectively) because they have an incentive to make a profit'.

I have two issues with this. Firstly, that public services should be a profit making exercise. Secondly, that this results in lower costs to the taxpayer overall. Perhaps in some cases, yes, but in all too many it has ended up costing more or descending into chaos. This especially applies to the large companies built almost entirely around getting public sector contracts - G4S, Capita et al. G4S in particular have made an abject mess of almost every contract they've been handed, and yet they keep getting handed more time after time. There is no accountability, no logic. Unfortunately the current administration seems in favour of selling off or contracting out just about everything they can, decisions that I have no doubt will at some point come back to haunt us in the future.

 

[tom1649]

I never thought we'd see the day when the UK outsources more public services than America, but that seems to be on the verge of happening.

 

[miami]

Saying no to outsourcing may seem fine in theory, and you certainly shouldn't outsource your "core conpetency", however what about the cafe at the hospital? Does it need to be in house, or is it better to allow the market to provide? What about IT? Or lighting? How about power supply? Power generation? Transporting staff to work?

All companies rely on other companies to exist, no man is an island as they say.

 

[fowler9]

Public sector being outsourced to the private sector seems to generally result in no choice and as much subsidy being paid if not more for the same service if not worse. I dearly wish I could tell you more about where I work.

 

[deltic]

Most outsourcing companies have been spun off from other organisations eg Capita was set up within the Chartered Institute of Public Finance and Accountancy. Others have moved into new areas by recruiting key personnel from that sector. As with most out sourcing the majority of staff are TUPEd across so the outsourcing company only needs to bring senior managers whose skill is management and finance etc.

The private sector can deliver more effectively not because of its profit motive but due to competition as contracts should be regularly relet. Without competition the private sector will generally be less efficient that than the public sector.

 

[DarloRich]

Saying no to outsourcing may seem fine in theory, and you certainly shouldn't outsource your "core conpetency", however what about the cafe at the hospital? Does it need to be in house, or is it better to allow the market to provide? What about IT? Or lighting? How about power supply? Power generation? Transporting staff to work?

All companies rely on other companies to exist, no man is an island as they say.

Surely it depends on which option, truly, offers best value to the taxpayer, including the complete lifetime costs of the decision and all the associated add ons such as logistics, bulk buying etc

 

[AM9]

Saying no to outsourcing may seem fine in theory, and you certainly shouldn't outsource your "core conpetency", however what about the cafe at the hospital? Does it need to be in house, or is it better to allow the market to provide? What about IT? Or lighting? How about power supply? Power generation? Transporting staff to work?

All companies rely on other companies to exist, no man is an island as they say.

Hospital cafe's were often run by charities (WRVS), and then there is car parking. Round here it's £2 per hour. Station car parking is as bad. Parking a car is part of visiting a hopiital/travelling, not a destination in its own right.

 

[Tetchytyke]

Surely it depends on which option, truly, offers best value to the taxpayer, including the complete lifetime costs of the decision and all the associated add ons such as logistics, bulk buying etc

Which, sadly, is something that precious few managers actually pay attention to when outsourcing.

IT is a great example. At the last place I worked it was in-house, until the senior management team had their heads turned by an outsourcing consultant. So everything got outsourced and the SMT were shocked- SHOCKED I TELL THEE- that all the little things that just got done when it was in-house suddenly started requiring additional tickets, all at an additional fee.

Proving that senior managers are incapable of learning from their mistakes, they did the same thing a year later with the catering outlets. Again they were shocked- SHOCKED I TELL THEE- that the additional income from the contractor paying a premium was more than offset by the additional costs for on-site event catering.

The private sector can deliver more effectively not because of its profit motive but due to competition as contracts should be regularly relet.

Like the senior managers in my last place, you appear (as many do) to be confusing efficiency with cheapness.

Multi-national conglomerates are usually good at competing on price, because they can spread core overheads across a larger business and they usually have better purchasing power. But most of the "efficiency" is nothing more than screwing over suppliers- suppliers of goods, suppliers of services and their employees- rather than any intrinsic ability to do more with less. Unless you shaft your suppliers and shaft your employees- like most cleaning and security contractors do- then there's a base cost that can't be brought down. As often as not this base cost is basically what the in-house service costs.

All competition does is manage the profit margin. Outsourcers will try and extract the highest margin possible, and if left unchecked will extract enormous profit margins. The fee charged has nothing to do with the cost of providing the service, but everything to do with how gormless the contracting party is.

 

[DarloRich]

Which, sadly, is something that precious few managers actually pay attention to when outsourcing.

IT is a great example. At the last place I worked it was in-house, until the senior management team had their heads turned by an outsourcing consultant. So everything got outsourced and the SMT were shocked- SHOCKED I TELL THEE- that all the little things that just got done when it was in-house suddenly started requiring additional tickets, all at an additional fee.

Proving that senior managers are incapable of learning from their mistakes, they did the same thing a year later with the catering outlets. Again they were shocked- SHOCKED I TELL THEE- that the additional income from the contractor paying a premium was more than offset by the additional costs for on-site event catering.

Surely not! I cant belive that a private contractor would bill for every single item outside of their (badly drafted) core specification or contract. I wont have that.............