Academic journal article SAM Advanced Management Journal

Outsourcing in Higher Education: A Survey of Institutions in the District of Columbia, Maryland, and Virginia

Academic journal article SAM Advanced Management Journal

Outsourcing in Higher Education: A Survey of Institutions in the District of Columbia, Maryland, and Virginia

Article excerpt

Academics may not like to think they are employed by businesses, but they are. Institutions of higher education must compete for students and with other institutions while remaining financially sound. Increasingly, they are adopting "best practices" from the business world, including outsourcing. But what do they generally outsource, and why? A survey of mid- to senior-level management tested 10 hypotheses and found that most outsourced services were non-core to academic missions; that improved quality was the main factor in decisions to outsource, but that reduced operating costs was the main benefit.

Introduction

Given the need to recruit students, make budgets cuts, keep up with innovative technologies, and cope with demographic growth trends and pressure from nontraditional educational institutions, today's colleges and universities are facing intense pressure (Glickman, Holm, Keating, Pannait, and White, 2007; Lee and Clery, 2004). They must remain competitive while retaining the essence of their existence: education. Additionally, students are demanding more from their higher education experience, so institutions have to deliver superior quality and customized services (Bekurs, 2007). Therefore, to survive, higher education institutions are exploring corporate best practices to achieve cost savings, effective management, and better supplier-relationship strategies (Comm and Mathaisel, 2008). Many managerial and accounting concepts, such as zero-based budgeting, management-by-objectives, balanced scorecards, and total quality management can be applied to the management of higher education (Kirp, 2003). It is not surprising that outsourcing is also used at many higher education institutions and that the decision to outsource has become increasingly important. Further, there has been a change in focus; the decision most institutions face today is not if they should outsource, but how they should outsource (Gose, 2005).

This paper explores the outsourcing behavior of higher education institutions in the District of Columbia, Maryland, and Virginia. Our research is based on a comprehensive survey of middle to senior-level management in over 100 institutions in the area. We analyze the survey findings and offer insights in approaching outsourcing decisions more effectively to achieve cost efficiency and improved quality. First, we discuss existing literature. Next, we construct our hypotheses based on background research and the literature review. We then present our research methodology and data, followed by a discussion of results. Last, we address the limitations of the study, discuss directions for future research, and present our conclusions.

Literature Review

From our background research, we found only one other study, by Gupta, Herath, and Mikouiza (2005), that surveyed a similar location base to ours on outsourcing activities. Their study looked at outsourcing in four-year institutions in Maryland, North Carolina, and Virginia. Their objective was to ascertain satisfaction levels of outsourced services; additionally, they researched approaches to outsourcing, its extent, and motivations.

According to the literature, many activities that institutions once managed themselves are now being outsourced, including food services, bookstores, student housing, health care services, computer services, security systems, Web design, campus maintenance, and alumni relations (Lee and Clery, 2004; Wood, 2000). In various studies, non-core services such as vending and dining services were extensively outsourced at all types of institutions (June, 2005; Moore, 2002; Wertz, 2000). In recent years, the types of services that institutions outsource has become even more diverse, covering orientation and freshmen sessions, counseling for substance abuse prevention, as well as financial planning (Lipka, 2010). These services may allow universities to differentiate themselves from their competition and potentially attract more students (Lipka, 2010). …

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