Risks in offshore IT outsourcing: A service provider perspective

Offshore outsourcing of Information Technology (IT) services is the prevalent practice in global businesses today. Despite the strategic advantages and cost benefits that offshore outsourcing offers, outsourcing relationships also involve risks, for both the client, as well as the service provider – a fact that is evidenced by the reported failures of such engagements. Some of the prior researches in this area have focused on identifying various types of client risks and their sources. However, the study of risks from a service provider’s perspective has not received due treatment in literature. This study analyses offshore IT outsourcing risks from the perspective of service providers. A case based approach using the principles of grounded theory was used for studying the risks. Theoretical sampling was used to collect data from 5 mid-tier offshore third party service providers based in Bangalore, India. From our coding and analysis three broad categories of service provider risks emerged, namely, macroeconomic, relationship specific and project specific. Relationship maturity, nature of contract, nature of service or project and nature of client were identified as contextual factors which influence the degree of risk.     

Fit between sourcing capabilities and organisational structure on IT outsourcing performance

Thus far, relatively few studies on the supplier side of Information Technology (IT) outsourcing arrangements have been based on empirical quantitative research. Previous research identified a recurring supplier problem, a lack of sustainability in IT performance. The literature revealed that a supplier's capabilities and organisational structure affect the supplier performance. We hypothesise that realising a fit between the necessary sourcing capabilities and organisational structure on the IT supplier side will result in a sustainable sourcing performance. We executed a survey research among employees involved in sourcing activities of three different IT outsourcing suppliers (N?=?135). The results from our analysis provide evidence that these constructs can be used to analyse differences between the three types of service suppliers. Results indicate that suppliers who focus on establishing a fit are more willing or able to monitor if they achieve a sustainable performance.     

Creating value through offshore outsourcing: An integrative framework

This article proposes an analytical framework to explain value creation through offshore outsourcing by addressing a key question: How do firms create value by outsourcing their business functions to foreign external providers? The growing prevalence of offshore outsourcing as a dominant business practice in global business makes this question worthy of further research attention. Situated within the organizational design literature, our proposed value creation framework also draws from strategic resource management, disintegration, location-specific resourcing, and externalization (D–L–E) and contingency perspectives. Our analysis shows that firms embarking on offshore outsourcing create value by effectively managing their internal and external resources in accordance with a changing global environment. The framework has significant implications for theory and practice and suggests avenues for further research.     

Strategic learning with scenarios

Since the oil shocks upset the business world in the 1970s, the use of multiple scenario analysis has been increasingly propagated as an approach to deal effectively with the many long-run uncertainties that surround business organisations. Since its introduction, the scenario approach has undergone some considerable changes and it is now claimed fulfils a diverse range of functions. Newly-added functions include the stretching of managers' mental models and the triggering and acceleration of processes of organisational learning. Although these functions currently get most of the attention in academic and management journals in recent years, a satisfying explanation of how scenarios fulfil these functions is still missing in the scenario literature. The scenario methodology seems to tell only part of the story suggesting that construing and using scenarios ‘simply’ consists of sequentially completing several distinct phases. If multiple scenario analysis really is able to fulfil the wide range of functions ascribed to it another, more dynamic process has to be hidden behind the rather static phase model. The scenario literature does not give any insight into this latter process. This article aims to increase the understanding of multiple scenario analysis by unravelling some of the mysteries surrounding it. For this purpose, the role of scenarios in strategic management is studied from a cognitive perspective. It appears that scenarios can deal effectively with several bottlenecks that potentially hinder organisational learning on a strategic level in organisations.     

基于分期付款的服务供应商合作意愿甄别研究

服务外包中信息不对称问题阻碍了服务外包的健康快速发展。服务需求商选择合适的服务供应商,并对服务供应商专用性人力资本进行有效的监督与激励是服务外包成功的先决条件。本文将分期付款方式引入到服务外包合同设计中,构建了信息不对称情况下服务供应商真实合作意愿的甄别模型,设计了有效分离不同类型服务供应商的报酬机制,并用实际案例验证了本模型的科学性与适用性,为服务需求商选择服务供应商提供了参考。     

QoS in the internal supply chain: the next lever of competitive advantage and organisational performance

This article presents a research that examines the relationship of quality of service (QoS) and organisational performance in a manufacturing setting. There are few empirical studies that measure QoS in the manufacturing supply chain. A model linking QoS with organisational performance through intermediate variables of satisfaction, loyalty and competitive advantage is introduced and tested in the internal supply chain of three automotive organisations. The research design for this article includes a combination of literature review, exploratory interviews with scholars and practitioners, and a survey of 156 practitioners in three automotive companies in North India. Structural equation modelling has been used for data analysis. This research comes out with four factor scale for internal service quality and six-factor scale for external service quality. The research revealed that employee-driven QoS is a source of value addition that is positively linked with the organisational performance. This study would be of interest to manufacturing industry practitioners interested in internal and external service quality improvements. Future researchers could validate this scale, and empirically test the proposed model.     

Revenue Management in Business Services

A significant portion of the services industry is focused on providing services (medical, legal, financial, personal, and travel) to individuals. However, studies have shown that a less visible but rapidly growing segment of the service sector comprises firms that provide business functions to other businesses. The sector covers tasks such as payroll processing, procurement, and information systems management, as well as business consulting, technical support, call center operations, and software development. Firms may choose to purchase, rather than perform, these business functions to reduce costs, to mitigate risk, or simply to focus on their processes that provide marketplace differentiation. Transferring a business function from within a firm to an outside supplier is often called “outsourcing”; when the supplier provides the service from a lower‐cost country, it is called “offshoring.” The risks and benefits of outsourcing to the firm purchasing a business service have been studied in some detail by both academics and consultants. In this paper, we outline revenue management issues faced by business service providers and describe some new opportunities for the use of analytic methods in the service science sector.     

Intelligent Public Organisations

The article explores the nature of the intelligence and organisational learning of public sector organisations with regard to both individual organisations and multiple organisational ecosystems. The main ideas behind modern systems theory (MST) and the logic developed by the MST theorists in the domain of organisational intelligence are pinpointed in the paper. The article presupposes that the basic structure of the organisational features of intelligence consists of leadership, strategy and foresight, people, partnerships and resources, and organisational processes, and the intelligence builds on these features. The article concludes with an explicit definition of the organisational activities that generate organisational intelligence, putting forward best practice examples with regard to these activities while also presenting scientific evidence to back up these claims.     

Sourcing strategy of Belgian SMEs: empirical evidence for the accounting services

The primary objective of this paper is to examine the sourcing strategy for one business function (accounting services), by looking at the degree of outsourcing for each task of this function. Three research questions are addressed: (1) What sourcing strategy do SMEs use for accounting services? (2) What are the reasons? (3) Is there a link between sourcing strategy and company characteristics? The research design consisted of a postal survey sent out to 1200 managers of SMEs in Belgium. The main results showed that 53% use selective outsourcing, i.e. combining both an inhouse accountant with an accounting service provider. The results also showed that 35% use total insourcing and 12% prefer total outsourcing. Surprisingly, cost reduction is not the main reason for outsourcing. External expertise is the main reason for selectively outsourcing. SMEs select a total insourcing strategy because they want the accounting information at hand. Finally, larger SMEs decide for a total insourcing strategy and prefer to keep the accounting services internal. The conclusions show that future research should focus on the degree of outsourcing. The practical implication of this study is that accounting service providers should highlight their expertise and overcome the disadvantage of remote data analysis to attract more SME-customers.     

Action,Reaction and Resignation: How Refugee Women and Support Organisations Respond to Labour Market Integration Challenges during the Covid-19 Pandemic

Even without the impact of a global pandemic, refugee women face obstacles to their integration into the labour market. Complex integration challenges are situated across different, yet interwoven, levels. These include restrictive policies at the institutional level, limited funding for support measures at the organisational level and a lack of skills at the individual level. Many of these are gendered and specifically affect women. Some might be further intensified by Covid-19. However, the pandemic's effect on the labour market integration of refugee women has yet to be explored.This paper examines specific challenges support organisations and refugee women have faced during the pandemic and their responses to these. Following a process perspective, we utilise a qualitative methods approach with semi-structured interviews. We collected our data in Austria, a European country that hosts numerous refugees and has an elaborate support network.Results show that the external shock of the pandemic amplified the importance of developing digital skills to support post-pandemic labour market integration. In addition, the pandemic exacerbated challenges for refugee women and support organisations. This led to ‘action’, ‘reaction’ and ‘resignation’ responses. We discuss these, and provide avenues for further research and practice.     

Offshoring Business Process Services and Governance Control Mechanisms: An Examination of Service Providers from India

As emerging markets increasingly rely on service businesses through offshore outsourcing, we examine the role of governance control mechanisms in improving performance among business process outsourcing (BPO) service providers in India. Using data collected from 205 emerging market‐based BPO service providers in India, we examine the antecedents and consequences of establishing governance control mechanisms in BPO service providers. Specifically, we examine how structural (use of contracts with the client), administrative (effective allocation and demarcation of responsibilities within the firm), and relational (collaboration and information sharing with the client) mechanisms drive the performance of a BPO service provider operating in an emerging market. We also examine how key task‐related (task connectivity and task security) and client‐related (end customer orientation and global control) antecedents influence the use of different governance control approaches in this environment. Our analysis finds that both task connectivity and task security significantly impact use of structural and administrative mechanisms, whereas end customer orientation is significantly associated with the strength of the relational mechanisms governing the emerging market‐based BPO service provider and its client. Further global control significantly influences the strength of the structural mechanisms between the client and the BPO service provider. Finally, the three mechanisms have a complementary influence in driving the BPO service provider's performance.     

Risk assessment of outsourcing e-procurement services: integrating SWOT analysis with a modified ANP-based fuzzy inference system

With electronic procurement solutions becoming increasingly sophisticated, many firms opt to source these services from third-party providers, effectively transferring (outsourcing) significant responsibility to these services companies. This action, however, entails certain risks, which are oftentimes difficult to assess. To guide managerial practice and to advance academic inquiry in this domain, we identify e-procurement risk factors through a strengths, weaknesses, opportunities, threats analysis, grounded in transaction cost economics (TCE), and propose a risk assessment framework based on the opinions of a group of experts. The approach taken is that of a modified analytic network process methodology, combined with a fuzzy inference system, which is versatile enough to accept the expert opinions in different input formats (such as linguistic variables and ranges). The proposed framework has the capability to aggregate expert judgements’ to estimate risk likelihoods, risk severities and risk factor indices, and derive overall risk magnitudes. The multi-method approach was motivated and is illustrated by a real-life case study of an Indian manufacturing company currently in the process of contract renewal with its existing e-procurement service provider.     

Incentive issues in performance-based outsourcing contracts in the UK defence industry: a simulation study

Traditional outsourcing literature has claimed gains for the customer in terms of quality and costs. However, such gains are illusory in outsourcing of high-risk, complex tasks. The use of contracts and governance mechanisms for handling complex procurements is essential in obtaining rewards from outsourcing. Powerful incentives and risks are normally used in industrial service contracts to transfer risks to measure compliance with performance measures. The availability contracts for complex engineering services provision are forms of outsourcing contracts that transfer resources from government to external service providers on a substantial scale. The change moves the contractor role from creating resources to managing resources. Such role change mandates collaboration with customers and suppliers in supply/value chains. The management task is then perceived in terms of linking and optimising alignments rather than increasing service levels. Incentive design is one mechanism for linking the coordination of resources required in availability contracting to the business model. This article studies the impacts of agreed contract type and incentive mechanism on the customer and service provider profits using agent-based discrete event simulation model under multiple risk sharing scenarios.     

产品后市场服务渠道选择:垂直式或网络化?

制造业服务化让企业将核心业务向服务领域延伸.在运营成本和服务能力的约束下, 为了给顾客提供高水平服务, 后市场服务可以由供应商自主提供, 或由第三方服务商提供, 由此分别形成了垂直式渠道和网络化渠道.针对这两种供应链渠道分别进行了建模优化, 通过对比两种供应链结构下的渠道服务水平、市场供给量和供应链上各成员的利润, 讨论了供应链的最优渠道结构选择.研究结果表明, 只要服务成本不变, 供应链的渠道结构不会改变服务水平.供应链最优的渠道结构由供应商与第三方服务商的服务成本差异决定, 只要第三方服务商的服务成本足够低, 供应商就应该选择服务外包和网络化渠道, 从而实现帕累托改进.     

Shared Services Transformation: Conceptualization and Valuation from the Perspective of Real Options

In today's volatile global economy, where many organizations face severe pressure to downsize, the “shared services” model, in which a firm merges common functions performed by multiple units into a single service delivery organization, provides an innovative approach to make business more efficient and effective. To successfully implement shared services, firms need to strategically decide whether and how to pursue various service transformation alternatives such as simplification, standardization, consolidation, insourcing, or outsourcing. In this study, we develop the notion of real options into a unique theoretical lens for conceptualizing service organizations and their transformation in an uncertain business environment. Specifically, we view service organization as a set of strategic options that give the firm preferential access to future transformation opportunities. We create a taxonomy of these options, and introduce a decision methodology for valuing alternative shared services transformation approaches. We illustrate this methodology by applying it in a real business case to justify a global firm's decision regarding the transformation of its finance organization.     

A Path to Successful IT Outsourcing: Interaction Between Service‐Level Agreements and Commitment

Although service‐level agreements (SLAs) are important for IT outsourcing management, appropriate mechanisms for constructing effective SLAs are still poorly understood, leading to inadequate or overcomplicated contracts that are ineffective. This study examines the associations among three distinct sets of SLA characteristics and outsourcing success, as well as the role of commitment in these relationships. Analyzing survey data based on a model theorizing the alignment of SLA characteristics with intended outsourcing objectives, we find that different types of benefits attained through IT outsourcing arrangements are associated with the use of specific contractual dimensions. We also find that commitment, in general, moderates the impact of SLAs on outsourcing success, although the nature of the moderation varies with the different benefits IT outsourcing engagement is intended to achieve. Interestingly, in certain cases—change characteristics for achieving technology benefits, in particular—commitment can be a barrier to the effective use of SLAs in achieving intended outsourcing benefits. As such, our study extends the literature on IT outsourcing, contracting and commitment, as well as provides a general guideline for practitioners to structure effective SLAs and to properly use commitment for managing IT outsourcing engagements to successfully achieve intended benefits.     

Managing Interdependence: The Effects of Outsourcing Structure on the Performance of Complex Projects*

The outsourcing of complex activities has become a common organizational practice. Yet very little research has focused on the implications of how these activities are divided up among outsourcing partners. Drawing on structural contingency theory, we argue that: (1) because activities within stages of complex projects are highly interdependent, outsourcing structures where owner firms do not maintain high levels of dominance over the activities that are performed will pose control and coordination challenges, leading to poor project performance; (2) the adverse effects of poorly structured outsourcing arrangements will spill over to subsequent project stages when activities are interdependent across project stages; and (3) dividing activities among large numbers of contractors or distributing work evenly among contractors exacerbates coordination and control problems further contributing to poor project performance. Our empirical analysis of 323 capital facility construction projects supports our predictions. Overall, these results provide strong evidence that some outsourcing structures are more costly than others and that because of the nature of complex projects the detrimental effects of poorly structured outsourcing are often not completely observable at the time activities are completed. We discuss the implications of our findings for capital construction and for outsourcing more generally.     

Performance management of suppliers in outsourcing project: case analysis from the financial services industry

This study investigates the characteristics of an effective performance management framework for outsourcing projects in a UK-based financial services organisation and how this may contribute to the success of the outsourcing arrangement. The analysis draws on outsourcing and performance management theory, and uses both primary and secondary data. Valuable information was found on objective setting, performance measurement and performance improvement in the outsourcing project. An adapted version of the Balanced Scorecard, termed a Logic Scorecard, is suggested as a measurement tool; a service credit system and a continuous improvement schedule used to enhance supplier performance. The performance management framework, which is one of the pillars of the supply chain operations reference (SCOR) model, was developed, and provides practitioners with step-by-step guidance for the implementation of performance management in outsourcing projects. This combines both suggestions for performance management before and after the outsourcing decision, thus considering the entire outsourcing lifecycle. The proposed 10-step framework for outsourcing not only incorporates strategic propositions but also shows its implementation at an operational level.     

Managing the external financing constraints of social enterprises: A systematic review of a diversified research landscape

Social enterprises, located between non-profit organisations and for-profit firms, often struggle to acquire external funding. An increasing amount of research on the external financing of social enterprises stems from a fragmented body of the literature anchored in a variety of subject areas (e.g. entrepreneurship, public sector management, general management and strategy). We systematically review 204 academic articles published between 1998 and 2021 to bridge the knowledge gaps in these subject areas by: (1) mapping the field of the external financing of social enterprises at the individual, organisational and institutional levels; (2) synthesising the findings to develop an overarching framework; and (3) discussing theoretically sound future research avenues. We find that research at the individual level focuses primarily on investors’ perspective of the ideal characteristics of a social entrepreneur. Research at the organisational level often addresses the dual logics of social enterprises and their impact on the successful financing of these businesses and the role of investor–investee collaboration. Research at the institutional level can be clustered into cultural, economic, political and legal factors. Overall, we stress the need for research that adopts an overarching view by considering all three levels of analysis simultaneously and using organisational and economic theories.