Published on 2014/01/07
To Outsource or Not to Outsource?
Front-end responsibilities should be retained by the institution, but secondary services equally critical to students are good candidates for outsourcing.
One trend institutional leaders across the country can relate to is the need to do more with less. Whether you’re coming from a flagship state university, a private liberal arts college, or a for-profit online institution, students are expecting more from us and we have fewer funds available to provide all of the services and products that satisfy their demands.

To help fill this gap, many institutions have started to look to vendors to outsource services they are unable or poorly resourced to provide in-house. In our case specifically, Tiffin is a relatively small and rural university offering undergraduate and graduate programs across three schools. One major challenge we faced was finding and retaining a strong IT staff; when it came to salary, we simply could not compete with the other regional corporations and non-profits from larger metropolitan areas nearby (less than 50 miles away). In response, we chose to effectively outsource most of our back-office IT services to a vendor. This ensures we have support in critical areas and guarantees our ability to provide high-quality IT services without constantly searching for and retaining a large IT staff.

Our partnership allows us to focus on content management and other front-end issues with the knowledge that the back-end infrastructure is stable and secure.

This brings me to the question: what should a higher education institution outsource, and what should it keep in-house?

Functions to Keep In-House

Institutions should keep a tight grip on their front-end responsibilities, both in administrative and academic functions. On the administrative side, I know of institutions that are talking about moving some administrative functions offsite, but as a finance person, some of those responsibilities are critical to the organization and must be monitored by dedicated team members. You must have staff very close to the operation managing business and administrative functions. There are a number of critical processes that can’t be outsourced in anyway: admissions, registration, financial reporting, payables, receivables, student accounts, ledgers and things along those lines.

Additionally, institutional leaders need to maintain control of academic processes. Academics are so individual and make up so much of the character of an institution that they can’t be subject to outsourcing. Ultimately, it’s the academic programs and quality that set institutions apart from one another.

Front-end academic and administrative functions need to stay within the control of institutions.

Functions to Outsource

That, of course, leaves back-end functions as prime candidates for service provider partnerships. As I mentioned earlier, IT services are at the top of the list for functions and processes that institutions can, with due care and a well-written contract, outsource to a vendor.

Many smaller institutions cannot be excellent at all functions. IT excellence, while very important, is outside of the main mission of academics and research. If you’re trying to teach students and do research and perform other tasks central to the mission of your institution, IT often does not have the resources necessary to support all of the functions an institution requires. That’s not to say this is the case for all institutions; some of the larger universities can certainly afford to generously fund their IT departments. However, as operating budgets shrink across the industry, many smaller institutions will have to consider whether to increase funding to underfunded and overstretched IT units or to outsource some responsibilities to a vendor with the resources to provide the services for a lower cost. Smaller, tuition-driven colleges and universities need to make some tough choices as they prioritize budgeting to focus on the most critical areas that provide the best support for their students, faculty and staff. In our case, we realized we had to make that choice: build it or outsource it.

Reflecting back, we realized we had been trying to build it ourselves for years, and throughout that time, we continued to struggle to develop an effective in-house IT department. Complaints from students, faculty and staff regarding the level of services provided by our IT area were many and frequent. Since resources were not committed to IT by the institution, over time the entire IT area fell behind in the very fast-moving world of information systems and technology. In order to overcome this deficit, we decided to partner with a vendor that had the resources readily available to bring the service level up as each innovation was introduced. Since we were so far behind, this process is ongoing. Project plans are in place to support and/or replace old systems and technology. New system capabilities are being reviewed and plans put in place to provide better support to our campus and online community.

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Readers Comments

James Branden 2014/01/07 at 9:08 am

The author provides a good starting point for institutions considering which services/function to outsource or keep in-house. I don’t necessarily agree with all of his choices for each category, but I still find his advice helpful in terms of determining what are key functions and what are secondary services, and making an outsourcing decision based on that. Each institution will have different answers and should make their decisions accordingly.

Brian Bloom 2014/01/07 at 12:05 pm

In my opinion, Wyden is too quick to say institutions must maintain full control of their academic processes. More and more, institutions are beginning to unbundle their academic processes and identify aspects that can be delivered more efficiently by a third-party vendor. One example that comes to mind is course design. I understand the desire and need for an institution to keep content development in-house, but a function such as designing the infrastructure in which to house the content could easily be outsourced to experts. With a third party to look after the operational elements of a course, instructors would be free to focus more on content, instruction and assessment.

Max Vitesse 2014/02/12 at 4:50 am

Because IT is big, expensive, hard to understand (for other managers), and to do well (even for CIOs), it’s way too easy to reach for the “IT is a good candidate to outsource” card. There are plenty of painful IT outsourcing stories; if you didn’t have the resources ($) to do it right in-house, then getting a vendor to do it won’t typically cost you less, unless you were mis-spending a good chunk of those resources in doing it poorly (mostly the case in orgs keen to outsource). The answer is not to pay a vendor more to do it, but to get a manager to manage the available resources to get the most important and valuable outcomes. Whatever you can’t afford will still be unaffordable (probably more of it, and more so) once you’ve outsourced; and the stuff that’s being done is porbably still the wrong stuff. How much will not doing the right things in IT hold back your organisation?

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