The Edge: College Leaders Get Serious About Outsourcing

And they still have plenty of concerns, too. [The Edge] I'm Goldie Blumenstyk, a senior writer at The Chronicle of Higher Education covering innovation in and around academe. Here's what I'm thinking about this week: A new era of outsourcing. Outsourcing at colleges ain't what it used to be. If you hear the term and think "dining services" or "bookstore," you're not wrong. But you'd be overlooking a range of other services that colleges increasingly eye as ripe for partnership with outside parties. Among them: managing online programs, predictive-analytics systems, skills training and boot camps, and even career counseling. Those findings come from a new poll by The Chronicle and P3-Edu, [a coming conference]( hosted by George Mason University. (P3 stands for "public-private partnership" — the term is commonly used even when university partners are private too.) The survey collected responses from 249 presidents, provosts, and chief financial officers. I've written before about the issues that arise when colleges align with companies for services that touch the classroom and other areas close to the academic core. (My term for those arrangements was ["embedded for-profits,"]( but the same issues could come up with outside nonprofits too.) So I was eager to see what folks reported. The chart below shows some top-line results from the survey. (Respondents could list more than one answer.) It's not a scientific sampling, but it does offer a nice snapshot of the state of play. [Image] What I found even more interesting were the anonymous comments people provided about their recent experiences with P3s, which laid out the promise of the partnerships and the reservations about them. Let's start with those reservations. (C'mon, you knew I'd do that.) More than 80 answered that question. Losing control of operations and finding companies' missions misaligned with the institution's were the fears that came up the most. College leaders mentioned the potential for communication failures and damage to their reputations and brands. Here's a sampling: "Always a concern that control is diluted. As a public institution, accountability is never diluted." "Companies are profit-making. We're a school. We do want efficiencies, but our missions are different." "Basically selling our soul to the devil." Several respondents cited concerns about costs, forgoing too much in income, and whether partnerships would be sustainable over the life of their contracts. As one wrote: "Turnover in the C-suite can undermine a partnership." As another put it: "Early in the process, everyone is 'in love' and life is good. Later in the process, sorry to say, 'divorces' occur." Those are valid concerns, and they barely touch on some of the more intricate possibilities — say, if a vendor's plan for building online enrollment doesn't mesh with an academic department's belief in how a particular degree program should be structured. Still, there's no denying that colleges see value in these outside parties. Two-thirds of college leaders said the "unique competencies" of private parties were a top reason they would look to them — or had looked to them already — as partners. The rising interest in P3s is also why George Mason decided to hold its P3 conference again this spring. I'll be moderating a panel there. And it's why The Chronicle will soon release a new report on outsourcing written by my colleague (and pinch-hitter for this newsletter) Scott Carlson. About half of the institutions that responded to the survey enroll fewer than 2,000 students; the rest are larger. Nearly three-quarters reported endowments no greater than $250 million; 14 percent were over $1 billion. A few disparities stood out. Smaller institutions were more likely to cite "superior service to in-house alternatives" as a reason to pursue partnerships. And while 46 percent of smaller institutions cited "online program expansion" as an area of interest, only 36 percent of the larger ones did. Among the wealthiest institutions, only 29 percent cited "superior service" as a reason to pursue partnerships. Meanwhile, 57 percent put "unique competencies" and (to my surprise) "availability of investment capital" as their top reasons. Apparently even rich institutions appreciate other people's money. Arizona State's plans for corporate education. Last week I wrote a story about [Arizona State University's plans to create a for-profit company]( to help universities team up with corporations in delivering online programs to their employees. The piece drew [attention]( because of the university's financial partner: an investment fund that had been run by a financier arrested in the admissions-bribery dragnet. Most of the feedback focused on the financier, Bill McGlashan, with the kind of reaction (and some of the [snark]( you might expect when an ambitious university finds itself connected with a prominent person facing public scorn. But I also heard confusion about the role this new "learning services" company might play with Arizona State and other potential university partners. So here's a bit more on that. The new company is designed to get under the hood with big employers to better understand the potential career pathways of their employees — and perhaps even their customers. Then the company will advise the university on ways it could develop courses, degrees, or other credentials that would be of use. It would also handle the technical and administrative functions involved in connecting employers' benefits systems to the universities, and provide coaching to students. Arizona State already does that with partners like Starbucks and Uber. But Michael M. Crow, the university's president, said it needs more money, resources, and expertise to expand. "We can't manage 40 Starbucks relationships," he told me. It may be no coincidence that the venture Crow describes sounds a lot like what the company Guild Education does now for other universities, although Crow wants only research universities as partners in Arizona State's venture. (Most of the colleges using Guild do not fit that description, although the company does count the University of Florida among its partners.) Arizona State's financial backer is a $2.1-billion social-impact fund called the Rise Fund, created in 2017 by the private-equity firm TPG. A source who is familiar with both ASU's efforts and Guild told me that among education investors, "it was an open secret that TPG was looking to do something in this space." I suspect more will join these ranks. Got a tip you'd like to share or a question you'd like me to answer? 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