Strategic Thinking

An increasing number of universities are outsourcing their services in a bid to cut costs and improve the student experience

At a time of intense debate about how higher education should be funded, Andy Shenstone, Group Market Director for Education at Capita Group, said that universities can benefit from establishing partnerships with external companies. “We’re seeing universities express a much greater interest in creating partnerships with our business. These partnerships enable them to focus on improving the student experience, while also contributing to the bottom line in terms of delivering value for money.”

This can mean a full outsourcing arrangement, where an external company takes responsibility for a particular university service or facility, but Shenstone is keen to stress that it is not the only form of private sector involvement. He added: “Outsourcing to us is just one example of a type of partnership, but it’s not the only one – the risk is that it’s viewed as being the only way to do things when we’re quite clear that it’s not.”

Strategic partnerships
These kind of partnerships or outsourcing agreements are typically used in ancillary or non-core university services, such as catering or estate management. However, having started working with universities in the ’90s, Capita now offers a wide range of services to the higher education sector. “The provision of information technology and advice, both hardware and software, is one component. We also provide strategic management consultancy services and work with universities in the area of estates and master planning in the built environment. Then we offer a range of professional services around HR and procurement, and work directly with universities to improve the quality of the student experience,” said Shenstone.

The exact shape of the agreement depends on the specific priorities of the university, and Shenstone says he and his colleagues put a lot of effort into understanding the sector’s priorities. “Only by listening and understanding the issues universities and students face can we then hope to offer solutions that are going to be attractive, that resonate, and that are relevant and appropriate,” he said.

One of the key issues facing the sector is of course finance, both in terms of rising student fees and in pension liabilities for the university. Affordability for students is a big preoccupation, leading this generation to ask fundamental questions about the value and purpose of HE.

“Universities see students who are increasingly questioning the value for money of specific courses and programmes. They want to see how their money is spent,” outlined Shenstone. While the sector is responding very positively to these changes, such as by making more course information available through things like the key information set (KIS), Shenstone believes the private sector can help universities address the issues they face. “We can help universities demonstrate the value they offer to students. But we can also increase the quality of their offering and their competitiveness, both domestically and globally,” he said. “Many of the UK’s higher education institutions operate globally, delivering education and research both domestically and overseas.”

This wider scope and role heightens the need for universities to engage with the private sector, but many students and university staff remain wary of the potential impact of these types of partnerships, particularly on local employment. Universities are often the major employer in a city or region and bring significant economic benefits, both directly and indirectly; Shenstone says universities can use their relationships with external companies to actually enhance these benefits. “Our university clients are looking for opportunities to sustain and enhance their impact on the local community. A lot of what we discuss with a university is around how that can be secured,” he outlined. This wider societal role also opens up a lot of opportunities for universities to establish partnerships and strong relationships with local businesses. “Universities take their impact on the local community and society very seriously, and the same goes for their relationships with local employers,” said Shenstone.

“We’re a large business with a presence across the UK – it’s not unusual for us to find that we have a large employee base ourselves co-located with universities in major cities, so we can establish strong partnerships with different universities.”

Student opposition
Many university services have historically been run in-house though, and the idea of them being outsourced to a third party is fiercely opposed by some students and lecturing unions. By taking advantage of the private sector’s commercial expertise, Shenstone argues that universities can improve the services they offer. “We typically find that universities are interested in creating strategic partnerships with businesses that can bring particular skills and competencies to bear, which they see value in,” he outlined.

Shenstone points to the company’s work with the University of Strathclyde as an example. “We have been working with the university to ensure it gets the maximum value from a very significant programme of investment it’s making in its IT infrastructure,” he continued. “We are delivering substantial value to the university by procuring its requirements at a much better price than it could have otherwise secured.”

This trend is set to continue, with many universities still keen to reduce costs in the face of ongoing financial pressures. Many institutions recognise that they have to transform what they do and how they operate to ensure their financial resilience, sustainability and attractiveness to students in the future. “We’re not talking about a sector that faces overriding challenges that threatens its continued profile and importance to the community and society at large,” said Shenstone. “However, what we do see is a sector that’s facing quite a turbulent period and is looking for partners that can help it and support it in continuing to be successful and punching above its weight in future. That’s where our focus lies.”

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