Question

What are the pros and cons of in-house service delivery as opposed to private contracting out? Which one do you think provides the best value-for-money and why do you think so?

Answer 1

The pros of in-house service delivery starts with the advantage of better control over delivery of services and a higher degree of flexibility as well when compared to the situation in private contracting out. Secondly in case of in-house service delivery monitoring can be done easily and on real time basis. In case of private contracting out monitoring be not as agile as it was in the case of in-house service delivery. Lastly checking for the compliance in case of private contracting out can become a time consuming and costly affair in many cases

The cons in case of in-house service delivery as opposed to private contracting out are manifold. First of all there are the most tangible cons of higher expenses in case of in-house service delivery. Private contracting out invariably leads to reduced level of expenditures. Also if the private contractor is selected appropriately then the dual aim of economy as well as efficiency can be achieved. Achieving this dual aim of economy as well as efficiency is not a practically feasible outcome in case of in-house service delivery.

I think that the best value-for-money is provided by private contracting out. This is because private contracting out is focused not only on the outsourcing aspect but also on the optimal management of that aspect. In-house efficiency is never neglected and the costs of contracted out inputs are also not ignored. There are also benefits of organizational economies in case of private contracting out. In case the governance structure in case of in-house service delivery becomes too overgrown then the only way in which it can be made more efficient, flexible and responsive is by letting go of and shedding some responsibilities that it cannot handle in a systematic manner.