Outsourcing is an emotive issue but it is not a new idea and still has life in it, say Sheila Pantry and Peter Griffiths. What should you look out for if you’re going down this route?
- Outsourcing is allowing another person or organisation to provide a service or part of a service previously carried out inside the organisation
- Externalisation is the delivery of a complete service, including the staffing and possibly the relocation of the service away from the purchaser’s premises, by an external supplier
Many people dislike the very idea of outsourcing – and they have many reasons, including self-preservation. This is without doubt an emotive issue, but evidence from a number of countries shows there are opportunities as well as challenges when outsourcing becomes an issue for library and information professionals.
The term has been applied in the last quarter century to the processes involved in providing a service by placing its supply in the hands of people who are not the direct employees of the organisation that provides that service to its customers. It has come to be associated with experiments in putting entire services in the hands of contractors rather than buying in distinct parts of that service.
Librarians and information professionals often discuss outsourcing as if it were a new phenomenon in their industry. Woodsworth and Williams, writing in 1993,1 put its origins in government privatisation policies. Yet there are examples of outsourcing of support activities for library and information services (LIS) that go far back into library history. For example, it was only in 1997 that the Library of Congress ended its catalogue card supply service – after almost 100 years.
Who is using outsourcing?
So there is a long tradition of outsourcing low-level processes and the routine parts of some professional activities, but what has been far less common is the contracting out of an entire service, or ‘externalisation’. In the last 20 years, this possibility has been opened up, especially in the public sector, by changes in political thinking.
The UK’s longest-standing externalised public library is Hounslow, where services are provided by a trust under contract to the local authority, and a small number of library boards elsewhere in the world have adopted similar policies.
However, a number of library services have used outsourcing, ranging from local authorities, through government departments (where the process was designated ‘market testing’) to libraries in the education sector.2
Client confidentiality and other commercial considerations make outsourcing more difficult in the corporate sector, but even here there are reports of the use of such facilities for storage and other support. Perhaps surprisingly, there is an extensive list of functions that have been outsourced by legal libraries, which would appear to have many of the same concerns.3 Compulsory competitive tendering (CCT) led to some limited outsourcing, such as at the London Borough of Brent where two branches were outsourced while the core service was still managed in the traditional way, but many early trials of outsourcing have since been abandoned.
Service specification
An outsourcing agreement is essentially very similar to a service level agreement (SLA) and can be used in the same way to govern the various aspects of the outsourced or externalised service.
The service specification must be carefully drawn up. You will often find excessive concentration on the quantitative aspects of service (How many books are to be catalogued? How many enquiries are to be handled?) when the LIS is not involved in writing the specification. What can be more useful is a focus on the quality of service (Are catalogued books delivered on time? Can they be easily found from the catalogue descriptions? Do users report satisfactory responses to enquiries?).
The specification must allow the managers of the outsourced service to have access to the policy-making process and the policy makers, so they can stay in touch with the business to receive information on new policies and in order to supply progress reports.
An SLA is helpful in specifying the arrangements for communications and for managing the flow of information to the service managers.
The literature shows that LIS use outsourcing to help them to grapple with concepts such as ‘value for money’ and ‘best value’. It appears that a justification for outsourcing used by many is that it allows them to focus on their core activities rather than on the delivery of minor services or areas of work that have low value and low interest.
It can be argued that LIS have long outsourced many of their activities, probably for similar reasons. Think of how many paraprofessional activities such as photocopying, book purchasing, handling journal subscriptions and inter-library loans are dealt with by libraries, while work such as book jacketing and labelling has been bought in from book suppliers for many decades. And, as we saw earlier, catalogue entries have been sold for more than a century.
Recent developments have led libraries to concentrate on core services. Influences such as cutbacks in funding, local government reorganisation, the growth of LIS purchasing consortia, new business initiatives created through mergers and acquisitions, and alliances and sponsorships in the book trade and in LIS, have all forced managers to focus internal resources on those areas where the skills of existing staff can add most value.
There are many examples where outsourcing in LIS has been achieved with good results. They include security and cleaning services, catering, book binding, loose-leaf updating, IT and computer support, and subscription services. There have also been examples in public and private sector libraries where previous in-house providers have competed successfully against private suppliers to offer such services. A frequent, though not universal, experience has been that in-house services have gained greater control of service costs, bringing benefits to both the LIS and the organisation through the outsourcing process.
Other professional areas are often outsourced including information technology, internet connectivity, technical services, collection development, document delivery, delivery of electronic resources and preservation.
What to watch for when outsourcing
It is difficult when you find yourself being a (possibly powerless) intermediary between the library user and the library supplier. You will have to put yourself first in the position of supplier in order to discover what your users want, and then become the purchaser in order to pass these requirements to the external supplier. However, thinking through the process from different points of view helps to identify weaknesses. Careful consideration helps the LIS to take steps to minimise the risks – even if managers are cautious about the time demands that this makes. You do, however, need to ensure that:
- there is a sufficiently large supplier base able to offer the service;
- a large enough number of suppliers are prepared to make a bid at a reasonable price;
- you have the resources to manage the resulting agreement or contract.
Otherwise you expose your organisation to risk.
If you draw up a specification so inflexible that it leads you into a one-to-one agreement with an inexperienced or poor supplier, you have effectively cut off the possibility of any worthwhile service development.
Similarly, if you choose to enter an area where there is only one supplier, you are at risk if that company fails, and may find yourself facing unexpected price rises or shortfalls in service quality.
Questions of ownership
In some circumstances, the question of ownership of the service, its stock, and even its staff, can arise. Your agreement needs to state this precisely, and your legal advisers should formulate the words to be used. These arrangements are commonly found:
- Ownership transfers to the outsourcing company. Specify what will happen at the end of the contract period, especially in order to avoid making an unplanned gift to a contractor if the contract is terminated. You may want to insert a clause to prevent the contractor from disposing of stock during the contract period without reference to you.
- The stock is leased to the contractor, possibly for a peppercorn rent. In this way the ownership of the stock is never removed from the LIS. In the public sector this may be your only option.
- The LIS retains ownership of the stock, and your contractor provides personnel or accommodation.
Beware of writing the terms of the agreement so precisely that you prevent the library service from changing its location, or prevent the contractor from disposing of out-of-date reference books.
Negotiating and agreeing the terms
Customers’ expectations
It’s important for the customer to understand the effect of outsourcing on service levels. Suppliers may not want to exceed particular levels, leading to the users’ expectations being disappointed. An agreement should not be concluded with the external supplier until users are fully aware of the service levels on offer, and signal their acceptance.
A problem encountered at this stage is the need to explain the operation of various areas of library and information work to the LIS users. Library users may be expecting some dramatic improvement or change in service as a result of outsourcing. If so, a communications programme may be needed to explain why sudden change will not occur.
Staff expectations
The possibility of outsourcing or externalisation and the consequent threat of job losses or radical changes of work patterns or routines appear as threats to LIS staff, so the process of service specification is highly important. A precise specification allows members of staff to have a better idea of what should happen under the new arrangements, and provides evidence of what was agreed in negotiation.
Suppliers’ expectations
In the supplier’s case too, the record of the negotiated agreement is an important document. It should indicate to the supplier whether there is a gap to be closed between the customer’s expressed requirement and the capacity of the supplier’s staff and technical resources.
If an agreement includes a requirement for the LIS to maintain membership of co-operative schemes or other inter-library organisations this should warn the supplier that negotiation with third parties is required.
Statements concerning legal obligations such as the handling of personal data under the Data Protection Act will also highlight areas needing particular attention, and remind suppliers that they need to satisfy you that their procedures will shield you from legal challenge. If the supplier is known to handle information outside the European Union (for example in order to re-key catalogue card data, which contains personal information) then the LIS must take care to include a suitable requirement in the agreement.
Providing feedback
Bear in mind that the more complex the specification, and the more performance indicators that are included, the more monitoring activity will fall on the LIS staff. Monitoring criteria need to be useful as well as meaningful, and measured or judged in a way simple enough to ensure that the costs of monitoring don’t outweigh any savings from outsourcing.
The overall effect should, of course, be that the LIS continues to provide the best possible range and quality of service to its users. In fact the nature of the service will change if any degree of outsourcing takes place. With full externalisation, the service may come from a different location – in which case questions like timeliness and the location of service points gain added importance – or with a different staff, who will need to get to know the organisation and its members (the library users). With outsourcing, library staff will have to get to know the supplier, and learn how its services fit into their own range of products for their library users.
Outsourcing challenges the accepted values and the aspirations of many library and information professionals. Changes can both encourage and dishearten practitioners, with positive responses being most common at middle management level where the opportunities are both visible and potentially attainable.
In organisations considering outsourcing, junior staff tend to be worried about job security, while more senior managers are concerned by the responsibility the changes bring in terms of their having to take decisions that could adversely affect the careers of those they manage.
The information professional is an essential player in the process of outsourcing, being the link that interprets the value of the library and information service to the organisation’s management. The first role is that of an adviser. If the organisation is determined to outsource its information service, the professional’s role is first to ensure that the specification for the new service fully meets the organisation’s requirements.
Whether or not the in-house team is selected to provide the service, they alone have the skills and knowledge to specify the organisation’s needs. It takes specialist knowledge and skills to draw up a service specification for an LIS, so if there is any suggestion that it will be possible for generalist staff or external consultants to do this without drawing on in-house professional expertise, this should be resisted.
Then the information professional must ensure that the supplier selected is capable of meeting the requirement (and does so). If the supplier turns out to be submitting poor or late work, there needs to be a mechanism in place to provide informed professional criticism that brings an improvement to the required standard, a warning or ultimately the installation of an alternative provider who is up to the job.
It’s worth making sure that the organisation is aware that, in the event of total failure of the supplier (whether through financial failure or the decision simply to close down), it might have to depend on the remaining in-house professional team setting up a service at short notice and reverting to earlier supply arrangements.
Library and information professionals are challenged by these and other related developments but, by being willing to adopt new roles, they can find a clear path forward. Managers will need additional skills to keep all staff informed and motivated during the outsourcing process. This is no easy task but it is within the capacity of any good LIS manager to adapt to such a new and positive role by building on existing skills.
Outsourcing is not a new idea and it still has life in it. It is important to have good specifications of services, and to ensure that, where internally-supplied services remain, the staff there are consulted in reaching the service specification statement. It needs to be recognised that all parties – staff, users and suppliers – have legitimate concerns in the process, and that outsourcing and externalisation make major changes to the nature of the service.
Outsourcing can produce worthwhile savings, and can improve job quality for the remaining staff, but it also has the potential to go badly wrong when requirements are not clearly spelt out, or not negotiated and agreed by all parties.
References
1 Anne Woodsworth and James F. Williams. Managing the Economics of Owning, Leasing and Contracting out Information Services. Ashgate, 1994.
2 David Ball and Carleton Earl. ‘Outsourcing and externalization: current practice in UK libraries, museums and archives.’ Journal of Librarianship and Information Science, 34 (4), December 2002, pp. 197-206.
3 Carol Ebbinghouse. ‘Library outsourcing: a new look.’ Searcher: the magazine for database professionals, 10(4), April 2002, pp. 63-69. www.infotoday.com/searcher/apr02/ebbinghouse.htm
Further reading
Sheila Pantry and Peter Griffiths. The Complete Guide to Preparing and Implementing Service Level Agreements. Library Association Publishing (now Facet Publishing), 2001 (2nd edn). ISBN 1 85604 410 6. £34.95.
Sheila Pantry and Peter Griffiths. Creating a Successful E-Information Service. Facet Publishing, 2002. ISBN 1 85604 442 4. £29.95.
Sheila Pantry and Peter Griffiths. Managing Outsourcing in Library and Information Services. Facet Publishing, 2004. ISBN 1 85604 543 9. £29.95.
Facet Publishing books can be ordered online at http://www.facetpublishing.co.uk/ or from Bookpoint Ltd, Mail Order Department, 130 Milton Park, Abingdon OX14 4SB (01235 827794; facet@bookpoint.co.uk). CILIP members receive a 20 per cent discount on all titles.
Sheila Pantry (sp@sheilapantry.com) manages an information services consultancy and e-publishing business and Peter Griffiths (pdg@dircom.co.uk) is Head of Information Services Unit, Home Office.
Updated: 20 April 2005