The Battle over Outsourcing

What Duke services are outsourced and what does the University control?

It was a warm day in April, and campus protests, like the proverbial love and flowers, were blooming. The usual drawl of a Wednesday afternoon broke to the sound of students, employees and labor activists marching together from East Campus to West Campus. They cried slogans and thundered away at buckets-turned-drums, finally carrying banners and signs up the Chapel steps to the waiting microphone.

Organizers hoped the ensuing speak-out would be the culmination of a year's work improving conditions for employees, and at the very top of their agenda was outsourcing.

Often used in an effort to improve quality and lower costs, and always a point of controversy, the relatively recent University practice of contracting out campus services is causing a stir yet again. Duke has traveled a rough road since the early 1990s, when the University first began outsourcing--or franchising, or privatizing--most dining facilities. First Burger King, then Li'l Dino Subs, and eventually a parade of companies offering a veritable on-campus food court.

Twice--with Wendy's in 1998 and ARAMARK Corp. in 2001--those efforts saw particularly heated controversy over how companies would treat employees and affect quality, but outsourcing has progressed largely unfettered. The Office of Undergraduate Admissions has partnered with a private company since 1995 to help recruit applicants. In 1999, Duke hired the Durham Area Transit Authority to operate several on-campus buses. Last year, the University contracted all its copying services with IKON Office Solutions, and administrators say they may give private corporations some control over campus housing, bookstores, technology and computing, and library services, among other ventures.

And yet, they may not.

While he leaves the door open for further outsourcing, Executive Vice President Tallman Trask says the phenomenon that was the rage of Auxiliary Services for much of the 1990s could be over. Both he and Vice President for Student Affairs Larry Moneta say they simply are not getting competitive offers from outside companies, many of which they say have lost interest in universities' business.

Students and dining officials alike rave about the increased food options outsourcing has brought to campus. The University has 31 different companies providing food to 41 dining operations, everything from Mexican food, to coffee and bagels, to New York-style delis--a far cry from Southern cooking at The Great Hall of yesteryear. The companies compete for student, faculty and employee dollars, and they have a guaranteed pool of funds in the form of student dining plans. In its early stages, the system was chaotic as restaurants spun through a revolving door, leaving campus only to have their successors fare no better, but turnover has since dropped off considerably. The system is so efficient, dining officials regularly travel to other universities as consultants.

But the jury is still out about its overall success. Customers complain about high prices and the lack of vegetarian options, and some charge that the franchises poorly treat employees. The latter indictment continues to spark protests like the one in April. Students and labor activists raise employee-manager relations, wages and benefits as the top issues. They also stress the benefits to employees of remaining unionized and on the Duke payroll--part of last year's ARAMARK agreement.

"It's definitely a question of responsibility," says junior Jessica Rutter, a member of the Student-Employee Relations Committee, which is not associated with the University. "When Duke is managing something itself, there's a sense of responsibility they have to have about employees, whereas if Barnes & Noble is managing the bookstore employees, they don't have that sense. It's a different atmosphere, like turning Duke into a mall and not a university community."

Noting that many outsourcing decisions are announced only after the fact, Rutter says unresolved labor questions point to the need for transparency in the decision-making process.

To what extent specific complaints of employee mistreatment are valid remains to be seen. Some whom outsourcing might affect the most, such as Ronald Cates, an employee of Devil's Duplicates--outsourced to IKON last year--say they have no complaints and that not much has changed. But many others remain hesitant to speak on the subject or must get permission from superiors in order to talk. Those who spoke at the April rally described a growing sense of alienation in the workplace.

'Like Outsourcing the Chapel'

Despite Trask's hesitation, more outsourcing may be on the horizon as Duke's dining experience serves as an inspiration for outsourcing in other divisions. Many universities have contracted with telecommunications companies to offer cable television or improved phone service, as well as to maintain in-house hardware or manage personnel. Angel Dronsfield, a senior director in the Office of Information Techonology, says OIT has not yet received an attractive offer but that it is open to outsourcing.

The same is currently true for bookstores like the Textbook Store and the Gothic Bookshop, often targets of customer complaints, and Trask has established a task force to study the option. Several task force members say the idea of having a company like Barnes & Noble run the bookstores is nearly dead, but that partnering with another company, such as Amazon.com, to provide textbooks is more of a possibility.

"We live in a world where everything is being outsourced, and I would really be upset if the bookstore were outsourced," says Claudia Koonz, professor of history and a member of the task force. "It would be like outsourcing the Chapel to other denominations. It just changes the atmosphere of everything."

Perhaps another fertile area for outsourcing is the Division of Student Affairs, particularly housing. Administrative plans for the next phase of housing construction have included a major demolition and reconstruction of Central Campus into a denser, multi-use area. For reasons of finances and expertise, the University may contract out not only the project but also the management of the completed buildings. In addition, Moneta and a senior ARAMARK executive recently co-wrote an article titled "Strategies for Effective Outsourcing" in the journal New Directions for Student Services. The article is essentially an outsourcing how-to guide that emphasizes flexibility and attention to a campus' idiosyncracies. Moneta says Duke has held true to those ideals.

"Duke is clearly being thoughtful in that, where it has outsourcing partners, it maintains control. It ensures that quality and service delivery methods are retained," he says, pointing out that even minor dining decisions are overseen by a student board. Still, that board--the Duke University Student Dining Advisory Committee--often draws fire from SERC members and other students who say it is not aggressive enough in investigating corporate responsibility.

Toward a More Efficient Academy

Increasingly, universities are outsourcing even some of their academic services. Some schools, such as the City Colleges of Chicago, under pressure from a funding shortage, have gone so far as to threaten replacing tenured faculty members with outside lecturers.

Such a scenario is difficult to imagine at Duke--where professors or graduate students teach nearly all classes, especially advanced classes. But the University does hire many non-tenure-track teachers, such as lecturers or professors of the practice. David Kirp, a professor of public policy at the University of California at Berkeley who has studied outsourcing in higher education, has called such positions "the academic equivalent of temp-agency fill-ins or day laborers." Duke administrators note, however, that the practice is still less common than at other universities, and that those teachers are often still respected figures.

The University's libraries are following closer to the traditional outsourcing path of seeking efficiency through specialized companies. As the heart of Duke's identity as a research university, Perkins Library receives thousands of books, magazines and other resources each year, including hundreds of materials in languages that librarians themselves cannot read. To catalogue foreign materials--decide what they are and where they go--library officials are looking to outsourcing.

"We sometimes acquire materials we don't have the staff expertise to handle, or we acquire them in such a volume that our staff cannot keep up," says Deborah Jakubs, director of collection services at Perkins. "We don't have a lot of flexibility in hiring staff with our budget now, so this gives us another way to meet that need."

Jakubs says the decision to outsource was made easier because the library is not partnering with a for-profit company, but with the Online Computer Library Center, a cooperative venture among universities. University librarians from around the country govern OCLC, which also specializes in preserving books and maintaining librarians' hallowed Dewey Decimal Classification. "It's just like sending our books to a professional library," Jakubs says. "It's not like sending them to Amazon.com."

One academic branch of the University that has contracted with a for-profit company is the Office of Undergraduate Admissions. Working with Richmond-based Royall & Company, a direct-mail service for college admissions offices, Duke purchases the names of high-scoring high schoolers from educational testing companies and shares the names with Royall, which then sends information to students.

"Royall mails materials within 48 hours of contact from a prospective student--a feat that cannot be matched by the limited admissions staff [at Duke]," according to a New Directions for Student Services article "Adventures in Outsourcing," compiled by two student affairs administrators from other universities. "Further, Royall tracks the responses and provides the university summary information that includes response patterns."

Christoph Guttentag, director of undergraduate admissions, is quick to observe that Duke has not outsourced decisions of who's in and who's out. Rather, he characterizes Royall's service as "mechanical," a mundane and non-substantive process of printing letters and licking envelopes. "There are things we do particularly well--recruitment among them--but there are also processes related to admissions that other companies can do either more efficiently, less expensively, or both," Guttentag writes in an e-mail. "And it makes sense for us to concentrate on those things that are going to have the greatest impact."

He cites other examples of outsourcing similar to the Royall model; the admissions office, he says, hired another company to create its online application.

The Road Paved with Efficiency?

Of course, not all outsourcing is created equal. As Guttentag hints, some business relationships often characterized as outsourcing have more in common with a traditional buyer-seller relationship than the fire sale of campus services that the term often suggests. No matter how much a university partners with the corporate world, the academy is still a long way from, for example, the automotive company that assembles parts made in a dozen factories in underdeveloped nations around the world. Outsourcing usually only describes the most extreme example of an institution divesting itself of a service.

That is not to say, however, that some at Duke and elsewhere will stop protesting private-sector involvement. Invoking images of a Thatcherite government turning back years of nationalizing major industries, terms like "privatization" demonstrate how much the phenomenon means to members of the Duke community. And, as British conservatives discovered in the 1980s, marriages to the private sector often meet with skepticism.

"I think there are certain areas where this works fairly well, including dining," William Chafe, dean of the faculty of arts and sciences and vice provost for undergraduate education, writes in an e-mail. "But corporations do not necessarily understand the culture of an academic institution, nor the competing values of faculty, students and workers on campus that could easily be ignored by an outside vendor."

At least ostensibly, the battle over outsourcing is at a truce, with most senior-level administrators not seeing major moves on the horizon and outsourcing critics concentrating on watchdogging current private-sector partnerships. But the combatants could rise again at any moment, sparked by the latest offer of efficiency, and the next rally promises to be not far off.