Delivering public services under the scheme of outsourcing can be done by using either profit organization, such as firms or companies, or not-for-profit organization resources. It is unquestionable that commonly not-for-profit organization or non-governmental organizations (NGOs) fill the gap between the government and the market in the public service provision. Several government services that are have important benefits to the society are not attractive the market (Besley & Ghatak 2007). As a results, many government services range from healthcare and sanitation to research, education, and social development are covered by NGOs. In general, this is because fundamental difference between profit and not-for-profit organizations.
The for-profit company is commonly seen as the profit maximizer. Cooper (2003) as cited by Greve (2008) argues that “the goal of such organizations (i.e. companies) is, by definition, to produce a profit, which makes it fundamentally different from the public agencies with which they are contracting.” Firms have other essential objectives too. For firms, it is important to maintain the business life for the long-term. That is why many firms are not always go for a quick profit, but are just keen to survive for the long-term. This fact affects firms’ relation to government. They will build strategy to maintain long-term relationship or partnership with the government (Greve 2008).
Meanwhile, NGOs, which have increasingly involved in the delivery of public services over the past two decades, have different characteristics compare to firms. What do matter for NGOs is the quality of the services delivered. NGOs have several ad...
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...lso confront a number of risks when implementing outsourcing policy. Accountability issue is often take place because outsourcing government service make accountability line becomes wider and uncertain. Another risks are collusive tendering and corruption, contractors deliver low quality of the services and social risk, such as the possibility of outsourcing increase unemployment.
By outsourcing government services, governments are able to focus on its core function and budget efficiency as an impact from these activities can be used to finance new programs or to improve the quality of the services that are delivered directly by the government. The outsourcing policy objectives is to increase the concern of governments and the public service users on the cost of public services. The main goal is to increase the quality of life of the people through quality services.
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