The Outsourced College

There was a time when colleges did almost everything themselves, much like the monasteries after which they were modeled. But that day is long gone. Today colleges are entwined with for-profit companies that provide a range of campus services (and pack the vendor halls of major higher-education conferences). Many companies prefer to call their transactions “partnerships,” but others who work in higher education give them a name that carries some baggage: outsourcing.

It has long been the norm for colleges to outsource services in their facilities departments, payroll offices, cafeterias, and retail stores. But in the past few years, for-profit companies have increasingly been tapped to carry out core college functions, including student services like advising, and even instruction.

Kevin Kruger, president of the student-affairs group Naspa, sees more colleges farming out mental-health counseling, assessments and surveys for accreditation reviews, and even their engagement with students over social media. “The risk is that you lose control of the mission, approach, values, and the quality of service,” he says. “There can be anxieties about the for-profit motive driving the service.”

At the same time, he adds, “no university in this country survives without outsourcing. No one does everything themselves. It’s impossible.”

Outsourcing started decades ago, when colleges contracted with companies that took over dining-hall services and campus bookstores. For years, any activity outside a college’s core mission — teaching and advising students — has been a candidate for outsourcing, says Bob Shea, a senior fellow in finance and campus management at the National Association of College and University Business Officers.

Some recent deals with private companies have been huge: Ohio State University leased all its parking facilities to an Australian firm for the next 50 years and got $483 million out of the deal. The Texas A&M University system struck a deal with Compass Group USA to let the company handle all of its landscaping, maintenance, custodial, and dining services, generating $360-million in savings and revenue for the system over 10 years. The University System of Georgia struck a $517-million deal with Corvias Campus Living to build and manage three million square feet in residence halls on nine campuses. Mr. Shea calls an agreement of that size, cutting across multiple campuses, “innovative” and unprecedented.

The rationale behind most outsourcing goes like this: Colleges are good at education but not necessarily good at all the services that go along with running a campus. By hiring companies that specialize in those various services, they might save money. (Whether colleges actually see those savings depends on how well they negotiate their contracts, Mr. Shea says.)

Richard DeCapua, associate dean of students at Boston College, notes an ever-increasing demand for student services at colleges, even as budgets get tighter. And institutions might feel more pressure to contract out additional services in the future. “I get emails all the time from companies that are saying, We can do this for you, or we can come in and show you how,” says Mr. DeCapua, who studied outsourcing for his doctoral degree. Large public universities generally outsource more services, he says, because the scale of those institutions make outsourcing deals more financially viable for both the institution and the company.

Many companies bring money to the table. A company called 2U, for example, helps universities get hybrid-online programs up and running, even providing all of the initial investment. It films lectures, digitizes course materials, and sets up the online platform that provides students access to the course. Employees of 2U find settings where students worldwide can perform clinical or fieldwork — for example, hospitals where students in Georgetown University’s online midwifery program can deliver babies. Over 10 to 15 years, 2U gets a cut of the revenue generated by the program.

There are parallels between what 2U does and what, for example, private developers of campus housing do: Both spend money to set up infrastructure for an essential component of the college experience, and both make a profit. But unlike many housing developers, Chip Paucek, 2U’s co-founder and CEO, bristles at describing his company’s services as “outsourcing,” calling the word “pejorative.”

“Pay attention to any presidential campaign, and the notion of outsourcing immediately becomes sort of a hostile term,” he says. “One of the reasons that we don’t love that word is that it somehow implies that the school has just turned it over to us.” In fact, he says, all the key academic decisions and content come from the colleges and their faculty members. Students value the universities’ brand, not 2U’s infrastructure.

“People are not attending our schools for operational efficiency, but for great faculty, great instruction, and networks,” Mr. Paucek says. “I am very careful that our agreements don’t get close to that line.”

In other cases, however, companies have had a more active role in creating and even teaching college courses. Pearson, a company that dominates the textbook industry, has created ready-made courses that can be adapted and taught by an adjunct. More than 800 institutions have used the product, called CourseConnect.

Last year Galvanize, a company that offers courses in web development, data engineering, and other technology areas, created a master’s program in data science, with classrooms in San Francisco, for the University of New Haven. Galvanize worked with the university’s faculty members to develop the curriculum and hire instructors, who were given faculty status at New Haven. The program was accredited through the university.

The university and Galvanize share revenue from the program but decline to say how they divide it. “We get more than they do, let’s put it that way,” says Jim Deters, chief executive of Galvanize. His company is looking to form partnerships around teaching skills with other institutions. “In the great unbundling of education that is taking shape right now,” he says, “those that are being creative and innovative, like what we have done with UNH, are going to be the ones that thrive in the future.”

Future business transactions between colleges and for-profit companies may go beyond the outsourcing of services.

InsideTrack, a company that has been providing nonacademic counseling services for colleges for 15 years, might present an example. Company coaches, often working remotely, help students with time-management and communications skills. Dave Jarrat, the company’s vice president for marketing, research, and industry relations, says colleges in the past usually took one of two tracks: Either colleges wanted the company to handle their coaching services, or they wanted to keep those services entirely in-house.

In recent years, a third trend has emerged: The colleges want their own coaching departments, but they want InsideTrack to help them build those departments. InsideTrack trains the college’s employees and provides software and other equipment.

Some colleges also retain the company’s help for the busiest times of the year, like enrollment season, or when dealing with special populations, like military veterans. “It’s hard for institutions to build out that function because it’s very seasonal — the colleges can’t hire and fire people,” Mr. Jarrat says. InsideTrack simply moves its coaches around to handle surging workloads on various campuses. It’s not impersonal service, he says. The problems and challenges cut across institutions.

“Ultimately,” Mr. Jarrat says, “universities are going through a process of discovery of determining what is their core competency — what do they want to own — and what services are available that they can leverage.”

Scott Carlson is a senior writer who covers the cost and value of college. Email him at scott.carlson@chronicle.com.