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Cities Deciding To Outsource Their Infrastructure

July 23rd, 2008 · No Comments

Tags: Financial News


With rising budgets due to salary increases, benefits and to some extent energy costs some large and small cities around the country have decided to take a closer look at outsourcing of their services.

Jacksonville, Florida Mayor John Peyton has already outsourced landscaping, auto repairs, trash pickup however when some of these jobs are outsourced the employees at the independent companies actually get paid more as was true when they outsourced janitorial services.

The small town of Pleasant Valley, PA located in the Pocono Mountains is deciding if they should outsource the town’s school buses to a private contractor. This is a common practice in many areas where you use to see school buses with the Districts name on them you now see a company name. Schools have also outsourced to catering companies and large franchises.

Is this a benefit for the community?
Maybe if it results in lower prices for the consumer but what usually happens is the Government Outsources to businesses which then have a strangle hold on the community.  The performance of the work is no longer accountable to the tax payer however the prices charged will increase because no other contractor can come in and replace the current provider.

For example in the Pleasent Valley situation gas prices may raise costs for the Bus Company that the town contracts with. Instead of the school district restructuring the pickup routes and laying off workers the bus company will adjust their rates for hardship reasons and not cut into their profits.

This will mean increased taxes for the local community.

Outsourcing is good for a number of reasons but when companies and government institutions begin to outsource their primary requirements they become nothing more then overhead for the product.

If a school outsourced every employee except the superintendent who just cut checks to all the companies then why should there even be a government…. In the same way this applies to companies like IBM who outsource all of their manufacturing and a large amount of their services.. Are they even a company anymore other then on paper or are they a just series of partnerships?

In the end what is being sold away are parts that use to form the whole. This restructuring weakens the entity by allowing one or a few parts effect the final product without accountability. If a School District Outsources their Bus System then they no longer control how they make use of that part of their organization.

 

 

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