Most people still define outsourcing as "shipping out" services (hence, American jobs) to highly specialized companies in other countries, especially to the front-runners like China, India, and Mexico. But that's only half the story. The other half of the story is that many great American companies provide very similar services at very competitive rates.
Post pandemic, as local governments (counties, cities, towns, etc.) re-open, they will do themselves a big favor if they start outsourcing some-to-most of their "non-essential" services to a host of great American companies. Since these companies tend to have much better systems in place than the local governments can ever envision and implement, the outsourcing will immensely improve data privacy and handling of sensitive records.
It will be a win-win, meaning those government services would be more efficient while lessening the taxpayers' financial burden. Today, given the dire straights most local governments are faced with, labor unions and civil service commissions will be a lot more amenable to outsourcing non-essential services than ever before.
While many 62+ employees (62 is the first qualifying age for social security benefits) with medical conditions would naturally take early retirement, government agencies can also offer early retirement incentives to all 50+ employees to lessen the jolt from outsourcing. No denying that it won't be pretty or perfect to start with, but as employees get used to outsourcing, they will be more accepting.
Now, let's differentiate between essential and non-essential services. The vital services include law enforcement, public health, public schools, public transportations, public works, corrections officers, firefighters, social services, sanitation, office management, budget, etc. The non-essential services comprise property assessment, assessment review, tax collection, information technology, DMV, parks and recreation, public housing and rental processing, youth and elderly services, hospital billing, building maintenance (government office buildings, school, hospitals, public libraries, public parking, etc.), women's and homeless shelters, etc. Here are some non-essential services that would make good outsourcing candidates:
1. Employee Benefits, Payroll, and Time Processing –- These are some of the most commonly outsourced functions in the private sector. While some small and mid-size local governments have already been outsourcing these functions, the large cities and counties are still far behind. These functions generally return the best bang for the buck when bundled across essential and non-essential services; for instance, there is hardly any difference between the processing of payrolls for law enforcement and the assessment office.
2. Tax Collection and Processing -– Local sales taxes, local income taxes, commercial rent taxes, sanitation taxes, water district taxes, tolls, etc. may be bundled and outsourced to companies specializing in this domain. In many local governments, these taxes are often managed and collected by separate units under different verticals, thus wasting significant taxpayer dollars on redundant or inefficient services that could easily be grouped or combined.
3. Property Data, Assessment, and Tax Collection –- This is the local juggernaut that needs serious considerations. If the counties need to single out one function to begin the "outsourcing" experimentation, this is the one – no two ways about it! This juggernaut has two separate umbrellas: (a) Property Data, Mapping and Assessment, and (b) Assessment Review and Settlements. Both services can be outsourced to the same company, creating a centrally responsible authority. The leading consulting firms like Accenture, Boston Consulting, Deloitte, EY, KPMG, McKinsey, PwC, etc. could quickly provide such outsourcing services.
4. Information Technology (IT) and Help-Desk Services –- IT service is the most common service in the private sector that gets outsourced to specialized global players like Accenture, IBM, Capgemini, TCS, Infosys, etc. Likewise, local governments should also consider outsourcing these services to such well-known companies. Even within the same local government, IT services are heavily duplicated among various agencies, so outsourcing will help minimize redundancy and duplications and help achieve higher efficiency, cost improvement, and scalability.
5. Public Parking Maintenance and Traffic Ticket Processing –- Private operators like Laz are already managing numerous public garages and surface lots for government agencies. Similarly, many private companies help the government process parking and traffic tickets. Because these companies use cutting-edge technologies, they also continually upgrade them to remain competitive. Some of them also provide general (parking) building and lot maintenance services and arrange for renovation and reconstruction services.
One of the most critical areas is the out-of-control property taxes that heavily favor the rich at the poor and middle-class expense. The minorities and seniors suffer the most, often to the extent that they are ousted from their roots. Therefore, the umbrella of property assessment and taxes should be the mother of all local governments' outsourcing.
Now is the time to emancipate the maxed-out taxpayers. Any tax hike to save non-essential services and their employees could be the kiss of death for the current administration.
Finally, Congress should bail out State and Local governments if -- and only if -- they pledge to outsource at least 80% of all "non-essential" services to the American companies.
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