During last several years it can be seen that different form of cross sectional public-private partnerships emerged and gained popularity on outsourcing of public services to private vendors. However, many critics say this new phenomenon brings advantages and beyond that faces multiple issues on the run.

Nonetheless, public and private sector managers should be aware of ethics and values of each sector. And a move towards focusing on efficiency, result oriented performance and market oriented strategies help to reduce the gap between public and private held companies (Barret, 2001). Doing business together to achieve a lasting business relationship between a public organisation and a market oriented company is considered as a very ambitious move and Vilvovsky (2008) says it brings typical challenges to management in the fields of data protection and privacy, legal constraints of the destination country, vendor selection, people management and ethics.

Public sector and it’s own risks.

Vilvovsky (2008) further explains public sector experiences its own specific risks in offshore IT outsourcing. The major risks are:

  • Uncertainty from short budgets – most of the long term IT offshore processors are dynamic and involved risks;
  • Possible loss of control – Most harmful to large-scaled IT outsourcing public sector projects is the loss of control due to the rapid change of technology and relationships;
  • Controversy between public service values and cost benefit approach – Public sector IT managers always has issues taking quick decisions opposed to prevailing traditional public sector decision making processes;
  • The perils of traditional management patterns – Public sector managers must understand that fixing policies and introducing new policies to overcome traditional management issues would prevent the successful outcome from offshoring projects;
  • The restrictive roles of policies and regulations – It is always hard public sector to meet the demands of the vendors and vendor countries on policies and regulations. Basically public sector organisations may face issues such as policies and vendor selections , risk assessment, performance monitoring and data security.

Benefits

Public companies that benefit of offshore outsourcing can increase the success in many ways:

  • Operational effectiveness – Global economy of scale and comparative advantage of location improve efficiency.
  • Innovation – Global use of skills , competencies and ideas;
  • Customer targeting  – Good adaptation to local customer demand.