Despite widespread implementation across the industrialised world, public
sector outsourcing remains a contentious policy for the simple reason that
many outsourcing contracts fail. Critics of outsourcing often argue that the
stated efficiency gains are illusory if outsourcing leads to a reduction in the
quality of service provision or a reduction in workers' terms and conditions of
employment. In this book, we ask: Do the criticisms of outsourcing have any
empirical validity? How can we explain the observed heterogeneity in outsourcing
outcomes? In answering these questions, we focus on the role of
uncertainty, incentives and transaction costs on contractual relationships.
Although the importance of these factors is well-known, there is little
empirical work analysing the effect of these factors on public-sector outsourcing
arrangements. The results, therefore, should help business, students
and government policymakers in identifying factors that affect the efficiency
of outsourcing arrangements.