The aims of the study were to find out whether or not outsourcing essential to the Department of Water Affairs and Forestry. The second aim was to establish how can outsourcing improve the Department's cost structure. And the last one was to develop a viable business model for outsourcing services within the Department of Water Affairs and Forestry. The main problem was that the Government opted for outsourcing as a move to save expenditure within the Department of Water Affairs and Forestry. This Department has outsourced car and truck financial services, insurance and management to imperial Group. This venture estimated that it would save the Department and the Government approximately R1 Billion on operational costs. This system is currently operational, but already management in the Department of Water Affairs and Forestry have realized that such a venture with huge financial implications should have been based on carefully planned and executed research findings than mere hypothesis about saving. The study research method that will be used is a case study. All the data gathered in the study, is relevant on to the case being studied. Though conclusions allow for inferences to be made, the cases where such generalizations are made or applied to must be similar in all respect. The study's sample consists of the Department of Water Affairs and Forestry and the Imperial Group. The two organizations were chosen because the outsourcing strategy could serve as a yardstick to measure similar agreements in the future. The specific area of focus is the agreement on car rental between the two organizations. The documents analyzed include the: • Department of Water Affairs and Forestry Outsourcing Strategy and Outsourcing the Billing Process (January, 2001). • Department of Water Affairs and Forestry Outsourcing Strategy and Outsourcing the Billing Process (February, 2001). • Department of Water Affairs and Forestry Procedural Manual for Official Transport with Imperial Vehicles Outsourcing services for the public agencies is a tool that is being used to offload those non-core functions, such as transport for a period of time. According to theory it is more cost effective to outsource peripheral tasks because the alternative, this is, maintain the same service within the organization is expensive. The findings of this study show that service should be outsourced but it is expensive, the individual factors that lead to this conclusion are far beyond this scope of the study and therefore will not be discussed in great detail. [Refer to the abstract within the thesis for the outsourcing model] The outsourcing model above, developed in this study shows that the profile of task or process aligned with the first (left most) column will call for the outsourcing of the task to a supplier. / Thesis (MBA)-University of Natal, Durban, 2002.