Business outcomes of outsourcing: lessons from management research (original) (raw)

Outsourcing has been broadly recognized as an important strategic choice made by companies and other organizations to achieve a wide variety of goals. Many studies have focused on the economic and fi nancial impacts and on the relationship between outsourcers and outsourcees. This chapter offers a comprehensive overview of actual outsourcing outcomes found in management research, including impacts on human capital. Analysis of the evidence on outsourcing in the OECD STAN database (OECD 2011: 1970-2009) shows that both the number of transactions (deals) and their scope (activities involved) have increased constantly during the last 20 years. Over time, outsourcing popularity peaks have coincided with certain trends, such as business process reengineering, strategic focusing on core business, outsourcing/offshoring strategies, shared services and corporate downsizing (e.g. Brunetta and Peruffo 2014). Furthermore, as recent research shows, companies are expeditiously outsourcing non-core business processes and functions in order to maximize their profi ts. Business profi ts can be increased through reducing costs and/or via acquiring external sources of strategic differentiation (e.g. higher-quality raw materials or distinctive expertise/competences able to improve the overall quality of products and services, enabling companies to sell them at higher prices) (De Fontenay and Gans 2008; Gospel and Sako 2010; Angeli and Grimaldi 2010; Doellgast and Gospel 2012; Giustiniano et al. 2014).

Outsourcing in Today’s Economic Environment

New Trends in Sustainable Business and Consumption

An economic phenomenon that is defined by the movement of industrial activity from developed to emerging nations has occurred during the past two decades. This technique may be seen as the huge firms' solution to the issue of production costs that were steadily growing along with rising living standards and compensation. This paper seeks to study outsourcing from the standpoint of its evolution as well as the benefits and drawbacks that come with it. On the other hand, this research essay aims to define the concept's foundations and explore its applicability to the public sector. Overall, research on outsourcing has shown that outsourcing can provide significant benefits in terms of cost savings, flexibility, and quality, but it also presents challenges in terms of managing relationships, maintaining control, and managing the human resources aspects of outsourcing. Companies need to carefully consider the potential benefits and risks of outsourcing before deciding whether to...

Consequences of outsourcing for organizational capabilities: Some experiences from best practice

2009

Purpose–The research on effects of outsourcing tends to focus on financial effects and effects at a country level. These are not the only consequences of outsourcing, though. When firms outsource functions previously performed in-house, they risk losing important competencies, knowledge, skills, relationships, and possibilities for creative renewal. Such non-financial consequences are poorly addressed in the literature, even though they may explain financial effects of outsourcing.

Trends In Outsourcing: Contrasting USA and Europe

European Management Journal, 2002

An international survey of outsourcing contrasts current practice between US and European companies. US companies are identified as pursuing more value adding sourcing strategies while European companies are more focused on gaining economies of scale through ...

The Outsourcing Equation: Is IT a strategic asset?

Nicholas Carr's May 2003 Harvard Business Review article "IT Doesn't Matter", stoked a debate on the idea that IT has become a commodity: That IT has evolved to the point where it can be viewed as a cost center to be controlled instead of an investment center to provide market leadership. If an element of IT proves to be a true cost center, and not a competitive advantage, then a logical approach is to find an outsourcer who specializes in that business and profit from economies of scale. The company can then save money through outsourcing and focus energy and invested capital on areas that are of strategic advantage. Determining which areas of IT to outsource then becomes critical. However, the decision to outsource may not be that simple. If an outsourcer can provide a company domain experience or resources that they do not readily have available, even strategic advantages may be candidates for outsourcing. After it is determined which elements of IT can and should be outsourced, then the remaining staff and projects are important to the company for some reason: Security, Market Leadership, Human Capital, etc. Those remaining areas are best left locally managed and are the areas of IT that are strategic assets.

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