Why Is Outsourcing Good for Some Employees and Bad for Others? How Demands and Resources Moderate the Outcome

Abstract

Research on public sector outsourcing primarily focuses on costs and quality, whereas studies investigating the consequences for personnel exposed to outsourcing are scarce. Based on increased competition and private ownership, this study hypothesizes that outsourcing negatively affects employee job engagement and burnout, with more adverse consequences when job demands are high and resources are limited. With unique survey and administrative data, the study compares outcomes for outsourced employees and public employees in similar jobs. The analysis shows that outsourced employees have significantly lower engagement and higher burnout, while further analysis shows that outsourced employees are worse off when job demands are high but equally or less affected when job demands are low. Finally, the analysis shows that outsourcing has significant, adverse consequences for less resourceful employees. The results advance our understanding of how outsourcing influences public personnel and highlights the uneven distribution of consequences across employees.