Toward a Framework for Managing High-Risk Government Outsourcing: Field Research in Three Italian Municipalities

Abstract

Many public sector organizations use outsourcing in an effort to take advantage of a private contractor's experience and economies of scale, thereby allowing them to provide high quality public services at a low cost. Although it has received considerable attention in the public policy and management literature for almost three decades, outsourcing has not always achieved a municipality's goals. To address the strategic and managerial issues of outsourcing, we combine a literature review with data obtained from a field study of three Italian municipalities. The resulting framework can assist public sector managers to determine both the services that are the best candidates for outsourcing, and the issues that must be considered in managing the chosen vendors to guarantee high quality and cost-effective results.

Keywords: outsourcing, government, risk management, public services, public sector

JEL Classification: H70, H79, M11, M55