Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of illustrations
- Acknowledgements
- 1 Introduction
- 2 Global services outsourcing overview
- 3 Making the services outsourcing decision
- 4 Location and sourcing model choice in global services outsourcing
- 5 Managing global services outsourcing arrangements
- 6 Creating shared services arrangements
- 7 Services outsourcing and performance management
- 8 Services outsourcing and the spin-off arrangement
- 9 Learning from failure and strategies for recovery in business process outsourcing
- 10 Conclusion
- Glossary
- Index
- References
3 - Making the services outsourcing decision
Published online by Cambridge University Press: 05 June 2012
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of illustrations
- Acknowledgements
- 1 Introduction
- 2 Global services outsourcing overview
- 3 Making the services outsourcing decision
- 4 Location and sourcing model choice in global services outsourcing
- 5 Managing global services outsourcing arrangements
- 6 Creating shared services arrangements
- 7 Services outsourcing and performance management
- 8 Services outsourcing and the spin-off arrangement
- 9 Learning from failure and strategies for recovery in business process outsourcing
- 10 Conclusion
- Glossary
- Index
- References
Summary
Introduction
Outsourcing has become a critical strategic decision that allows organisations to develop and leverage the capabilities required to compete in today's global business environment. Leading firms have been adopting more sophisticated outsourcing strategies, and have been outsourcing core processes such as design, engineering, customer service and marketing. These organisations have been benefiting greatly from accessing the specialist capabilities of vendors in a range of business processes. Leveraging the capabilities of more capable vendors allows organisations to outsource more critical business processes and enhance their own core capabilities that drive competitive advantage. However, many organisations are failing to capitalise on the opportunities offered by outsourcing, and often rush into outsourcing without fully understanding the complexities and risks. Selecting the most appropriate sourcing strategy encompasses a number of critical issues including the implications for competitive advantage, vendor capabilities, risks in the supply market and achieving a balance between the use of formal contracts and collaborative relationships.
This chapter presents a framework for identifying suitable outsourcing strategies for business processes. Integrating transaction cost economics (TCE) and the resource-based view (RBV), the framework provides a mechanism for understanding which processes should be kept internal and which should be outsourced, based on both organisational capability and opportunism considerations. The chapter is structured as follows. An overview of TCE and the RBV is presented, along with a rationale for integrating both theories into outsourcing decision-making.
Information
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- Information
- Global Services Outsourcing , pp. 45 - 78Publisher: Cambridge University PressPrint publication year: 2010
References
, and (1997). Achieving Success in Information Systems Outsourcing, California Management Review, 39(2), 63–79CrossRefGoogle Scholar
and (1993). The Information Systems Outsourcing Bandwagon, Sloan Management Review, 35(1), 73–86.Google Scholar
(2003). The Seven Deadly Sins of Outsourcing, Academy of Management Executive, 17(2), 87–98.Google Scholar
, and (1998). Impact of Organisational and Contract Flexibility on Outsourcing Contracts, Industrial Marketing Management, 27, 373–84.CrossRefGoogle Scholar
, and (1992). Incomplete Contracting Issues in Information Systems Development Outsourcing, Decision Support Systems, 8(5), 459–77.CrossRefGoogle Scholar
, and (2005). Strategic Sourcing: From Periphery to the Core, Harvard Business Review, 83(2), 132–9.Google ScholarPubMed
(1985). The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, New York: Free PressGoogle Scholar
(1993). The Cornerstones of Competitive Advantage: A Resource-Based View, Strategic Management Journal, 14, 179–91CrossRefGoogle Scholar
(1991). Firm Resources and Sustained Competitive Advantage, Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
and (1990). Causal Ambiguity, Barriers to Imitation, and Sustainable Competitive Advantage, Academy of Management Review, 15(1), 88–102.CrossRefGoogle Scholar
and (2005). The Impacts of IT on Firm and Industry Structure: The Personal Computer Industry, California Management Review, 47(3), 122–42.CrossRefGoogle Scholar
(2002). Reassessing the Fundamentals and Beyond: Ronald Coase, the Transaction Cost and Resource-Based Theories of the Firm and Institutional Structure of Production, Strategic Management Journal, 23, 535–50.CrossRefGoogle Scholar
and (2002). Do Formal Contracts and Relational Governance Function as Substitutes or Complements? Strategic Management Journal, 23, 707–25.CrossRefGoogle Scholar
, and (2002). Relational Contracts and the Theory of the Firm, Quarterly Journal of Economics, 117, 39–84.CrossRefGoogle Scholar
(2004). Outsourcing as a Strategy for Driving Transformation, Strategy and Leadership, 32(6), 26–31CrossRefGoogle Scholar
, and (1997). Achieving Success in Information Systems Outsourcing, California Management Review, 39(2), 63–79CrossRefGoogle Scholar
and (1993). The Information Systems Outsourcing Bandwagon, Sloan Management Review, 35(1), 73–86.Google Scholar
(2003). The Seven Deadly Sins of Outsourcing, Academy of Management Executive, 17(2), 87–98.Google Scholar
, and (1998). Impact of Organisational and Contract Flexibility on Outsourcing Contracts, Industrial Marketing Management, 27, 373–84.CrossRefGoogle Scholar
, and (1992). Incomplete Contracting Issues in Information Systems Development Outsourcing, Decision Support Systems, 8(5), 459–77.CrossRefGoogle Scholar
, and (2005). Strategic Sourcing: From Periphery to the Core, Harvard Business Review, 83(2), 132–9.Google ScholarPubMed
(1985). The Economic Institutions of Capitalism: Firms, Markets and Relational Contracting, New York: Free PressGoogle Scholar
(1993). The Cornerstones of Competitive Advantage: A Resource-Based View, Strategic Management Journal, 14, 179–91CrossRefGoogle Scholar
(1991). Firm Resources and Sustained Competitive Advantage, Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
and (1990). Causal Ambiguity, Barriers to Imitation, and Sustainable Competitive Advantage, Academy of Management Review, 15(1), 88–102.CrossRefGoogle Scholar
and (2005). The Impacts of IT on Firm and Industry Structure: The Personal Computer Industry, California Management Review, 47(3), 122–42.CrossRefGoogle Scholar
(2002). Reassessing the Fundamentals and Beyond: Ronald Coase, the Transaction Cost and Resource-Based Theories of the Firm and Institutional Structure of Production, Strategic Management Journal, 23, 535–50.CrossRefGoogle Scholar
and (2002). Do Formal Contracts and Relational Governance Function as Substitutes or Complements? Strategic Management Journal, 23, 707–25.CrossRefGoogle Scholar
, and (2002). Relational Contracts and the Theory of the Firm, Quarterly Journal of Economics, 117, 39–84.CrossRefGoogle Scholar
(2004). Outsourcing as a Strategy for Driving Transformation, Strategy and Leadership, 32(6), 26–31CrossRefGoogle Scholar
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