Abstract

This thesis aims at assessing the effects of outsourcing on provision of public services. Specifically, the thesis dwells on the effects of outsourcing on cost and quality of public services, the major goals of outsourcing. However, the thesis further analyses the effects of the conduct of officials engaged in making outsourcing decisions on the outcomes of outsourcing. The study uses the transaction cost theory and the quality shading hypothesis to analyse the effects of outsourcing on public services. It adopts the qualitative research design in collecting and analysing its data. The study, therefore, finds that outsourcing has a positive effect on the direct costs of providing public services with evidence of costs reduction of ranging from 18% to 54%. Nonetheless, the study has established that there are transaction costs relating to outsourcing which are ignored when computing the cost of outsourcing. These include the cost pertaining to advertising for bids, evaluating the bids, and enforcing the contracts. These may affect government’s outsourcing decisions if they are to be taken into consideration. The study has also established that the effects of outsourcing on the quality of public services is mixed, mainly because the definition of quality is highly subjective. This is exacerbated by lack of predefined measures of quality. Finally, the study established that public officials receive financial incentives to influence outsourcing decisions. These incentives are either solicited or offered by the private sector employees. The study, therefore, concludes that for outsourcing to be more successful in the public sector, there is need for government to develop a universe of all outsourcing related costs, financial and non-financial, and work to minimize them. Further, service contracts should have objective and clearly defined expectations, responsibilities, and sanctions between government and the outsourced companies.

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School	: School of Humanities and Social Sciences
Issued Date	: 2018

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