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The legislation will prevent further deterioration of finances of the State and at the same time conserve the resources for the welfare and developmental activities.

The Act prohibited the appointment of persons on daily wage basis and regulated the temporary appointments. Thereafter, GO (P) No.112, Finance and Planning (FW.PC.III) Department dated 23.07.1997 was issued regularizing and absorbing part-time employees. Another G.O.Ms.No.94, General Administration (Ser.A) Department, dated 28.03.2003, framing new recruitment policy and issuing guidelines thereunder in respect of Government departments, Government undertakings, autonomous institutions, local bodies and all such institutions receiving grants-in-aid for salaries from the State Government was issued. As per the said State Government Order, the gazetted and non-gazetted posts under Group-I and II of A.P. Subordinate Service Rules were treated as core-functional posts which will be identified by the implementation committee of each department. It was also stated that the existing permanent posts in all categories including non-core categories shall be treated on par with core-functional posts and continued on permanent basis, however in future no new posts in the non-core functional categories shall be made permanent. The direct recruitment shall be restricted only in the case of vacancies arising against existing permanent posts in all the departments. The direct recruitment or contractual appointments in Group-III, IV and Class-IV posts shall be deferred till the adjustment of all already available direct recruits against future permanent vacancies. It was directed that from 1st April 2003 all the departments shall maintain separate rosters for permanent and temporary posts of all core-functional categories in order to identify direct recruitment and promotion vacancies. The recruitment of vacancies of core-functional temporary posts shall be filled up through contractual appointments on a fixed tenure basis. Regarding support services it was stated that there are two types of outsourcing of support services; the first one is the outsourcing of functionaries and the second one is outsourcing of functions. In the first case the department was given liberty to enter into a contract with the agency to provide certain number of technical support functionaries e.g., computer professionals, surveyors or draftsmen for a specific period. In the second case the department was given liberty to outsource the functions e.g., catering, house keeping, security etc., to a service provider agency for a fixed period of time for a mutually negotiated amount. The Government reviewed the said position and ordered that regular direct recruitment in Group-III, IV and Class-IV categories against existing temporary vacancies shall be discontinued forthwith. It was made clear that in future no further direct recruitment shall take place for such non-core functions or posts. It was also stated that each department shall calculate their likely direct recruitment vacancies in permanent or temporary categories for the next one year and obtain approval of the Government in consultation with the Finance Department as per the Rules of Business for filling them up as per the prescribed mode of recruitment i.e., regular recruitment or contract appointment or outsourcing as the case may be. The Finance Department could forward the requisition to the concerned recruitment agencies for regular recruitment or contract appointment as the case may be or authorise the concerned department to outsource the support services in accordance with the guidelines issued in Annexure-II to the said order. The Annexure-II provided the guidelines for outsourcing of support services. The guidelines included the redeployment of existing permanent and temporary staff and absorption of surplus staff. The Government Order provided for making amendments to A.P. State and Subordinate Service Rules 1996 and other relevant rules. G.O.Rt.No.4271, Finance Department, dated 01.11.2008 was issued, issuing comprehensive guidelines for payment of remuneration to the contract/outsourcing persons by first of every month and also to avoid confusion regarding selection of outsourcing agencies. Now, G.O.Ms.No.151, Finance Department, dated 08.08.2016 is issued containing comprehensive guidelines on outsourcing of functions and functionaries.

Privatization does not always lead to cost savings or better service. In some instances, private firms have had significantly higher cost overruns than government agencies in the performance of services. In other instances, private firms have performed work that has been criticized as being grossly inadequate.
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It can be expected that privatization will remain a controversial idea. Any attempt to improve the federal governments provision of goods and services through privatization likely may elicit concerns over the intentions and possible consequences of the proposal. Meanwhile, implicit in the debate about privatization lurks the old and nettlesome question Which activities are essential to the state and should remain directly accountable to the elected representatives of the people and which may be carried out by the private sector The debate is going on all over the world. Studies are being conducted. But the Government in its enthusiasm introduced the concept of outsourcing of functionaries and functions without much study and the result is not improvement of services but insecurity of employment and concomitant ills.