Outsourcing. It is ubiquitous in the private sector. Low skill jobs are shipped to low wage countries to increase the bottom line for corporations.
Outsourcing is also common in the public sector. For decades proponents of outsourcing government services argued that it is a more efficient use of public funds; pay private companies to provide the services that are typically delivered by governments. They believe that the private sector can deliver similar services for a lower cost and at a higher quality.
Critics of outsourcing argue that the promised savings are illusory; the proponents of outsourcing government services have a stronger ideological argument than an empirical argument. Where is the evidence, they ask, that supports the contention that government gets more for its money by outsourcing services?
Now we have an answer. And it is not good for proponents of outsourcing.
According to a long-awaited new study by the Project on Government Oversight (POGO) the “savings often promised in connection with outsourcing services are not being realized.” According to the study governments are negotiating competitive prices for services–government is paying market prices for services–but those same services are not cheaper than if the work was done by “in-house” government workers.
The government pays contractors 1.83 times more than it pays federal employees in total compensation, and more than twice the total compensation paid in the private sector for comparable services.
In short, government is paying more for work by private sector employees because they receive better compensation than their public sector counterparts.
Why bother making note of this study on this blog? The direction that CSU Chancellor Charlie Reed and the CSU Board of Trustees is taking our university is toward a model that relies heavily on outsourced services. A large portion of the faculty in the CSU, over half, are low wage, part-time, non-benefit eligible workers. That part of the model is well -established and well-understood.
The next step in the Chancellor’s plan is to outsource the content of courses. Typically faculty determine course content and evaluate students.
In the Chancellor’s new and improved vision private companies like Pearson, McGraw-Hill, will create on-line course content for delivery by an interchangeable workforce of low-wage delivery units. These instructors need not have any particular qualifications–like Doctoral or other terminal degrees–experience, or any particular expertise. The CSU will simply contract with the “content provider” and assign an instructor to “deliver” the content. Because the course is delivered on-line the instructor need not live in California, or even the U.S.; instructors could be drawn from India, China, Vietnam, or anywhere that labor is offered at the cheapest cost.
Forgetting the obvious question for the moment (is this the best way to educate college students?), the POGO study promises that the savings envisioned by the Chancellor and the Board will not be realized. Profit is the primary motive for private companies like Pearson and McGraw-Hill. The “content services” offered by these companies will cost more than advertised.
Furthermore, once the CSU system is locked in to a small number of service providers they will inevitably increase their content delivery fees incrementally to maximize their profits. Think about your cable bill, for instance. Has your cable company ever decreased your bill? No. But they have incrementally increased it, and over the course of years you are paying much more than you did when you first signed on, right?
The Chancellor and the Board have bought into a myth. It would not be so tragic if the implications of this new delivery model were not so grave. We are talking about the education of our future workforce, and the decline of the California State University, the largest and most successful educational enterprise that the United States has ever seen.