In- or Outsourcing within a Public Organization - A case study of internal allocation decisions between Intraservice and other subsidiaries within the Municipality of Gothenburg City

Abstract

The concept of in- or outsourcing has been researched extensively in a private organizational context, in contrast to a public organizational context. This thesis uses a novel approach by applying the in- or outsourcing concept within a larger public organization. It is a case study of the Municipality of Gothenburg City, in collaboration with Intraservice (a subsidiary of the municipality). Intraservice is the city's internal support organization that other municipality subsidiaries can turn to for technology, human relations, and administrative support. The case study is limited to allocation and structure decisions regarding the service of portable computers. Intraservice recently introduced a service for portable computers called “KST” (Client as a Service) for all subsidiaries within the municipality. This service is optional for the subsidiaries, resulting in them not being forced to join. Thus, by taking a subsidiary perspective instead of a municipality perspective, the decisions of an independent subsidiary can be seen as an in- or outsourcing decision. To research these structural and allocational decisions ten interviews were conducted, two with employees from Intraservice and eight with employees from other subsidiaries within the municipality. The interviews were semi-structured and had questions connected to the literature review to enhance the connection between empirical findings and the theories. The literature review consists of three different areas, Public Sector, Operational Management - Allocation Decisions and In- or Outsourcing. By connecting literature about the public sector and operational management to in- or outsourcing, the thesis further motivates why in- or outsourcing can be connected to internal decisions. The empirical findings indicate that opinions about allocation varied between the different subsidiaries and Intraservice when it came to the service of portable computers. The allocation of the activity could, empirically, be seen as depending on the size of the subsidiary, where larger ones to a greater extent, had an allocation of resources and responsibilities of technology internally meanwhile smaller subsidiaries had it externally at Intraservice. The analysis shows that in- or outsourcing decisions on a subsidiary level, between other subsidiaries and Intraservice, have many problems in common with a completely external partner. For example, the level of trust and understanding of business-specific demands. The thesis concludes that the existing structures of the subsidiaries and the municipality have made it difficult to optimally allocate the service, KST, centrally. The service is too standardized to meet the specific business needs of the subsidiaries, which has led to backsourcing and localization of the service. Solutions may involve better communication between the subsidiaries and Intraservice, some form of localization, and less standardization. Recommendations for future research consider the new application of in- or outsourcing within an organization and the aspect of the research being conducted in a public organizational context.