KEY STRATEGIES BEHIND IT OUTSOURCING

Key Strategies behind IT Outsourcing

Abstract

Global outsourcing is a management strategy by which an organization delegates major? non-core functions to specialized and efficient service providers. Global outsourcing represents a significant shift in the way organizations manage and staff their business support activities. While global outsourcing has received considerable attention from practitioners and consultants? there has been little empirical research published on global outsourcing. This study explores why and how organizations are using global outsourcing and identify problems that effect global outsourcing success. The results showed that organizations generally considered themselves successful at global outsourcing. However? while they achieved significant improvement in organizational effectiveness? they were not achieving the order of magnitude improvements ascribed to global outsourcing.

Table of Content

CHAPTER ONE4

INTRODUCTION4

Background of the Study4

The global imperative for outsourcing5

Aims of the Research11

CHAPTER TWO12

LITERATURE REVIEW12

Mortgaging the future: losing key skills and capabilities14

Choosing to outsource at the wrong time in a market's evolution16

Know your options and consider the timing and risk21

CHAPTER THREE23

METHODOLOGY23

Hypothesis23

Research questions23

CHAPTER FOUR26

DATA ANALYSIS26

Industry types and perceptions of the global outsourcing strategy27

Level of familiarity and usage of global outsourcing28

Why are global outsourcing projects undertaken?28

The degree of success or failure of outsourcing strategies32

How are global sourcing efforts organized?34

Factors associated with the success or failure of global outsourcing strategies35

Chapter Five40

Conclusion40

Limitations of the Study40

Recommendations41

REFERENCES43

Chapter One

Introduction

Background of the Study

Global outsourcing has received considerable attention in the popular and business press over the last few years (Corbett? 2006? 07). A search of outsourcing and global sourcing in the data base “ABI/Inform” as keywords yielded 1?625 references since 1997. However? global outsourcing has received less attention in the empirical? academic literature. Global outsourcing is a strategy of redesigning? redefining? reshaping? and energizing organizations all over the world (Corbett? 2006? 07).

The potential of global outsourcing is enormous. If implemented correctly? some authors claim it can dramatically improve an organization's effectiveness. According to the Outsourcing Institute? on average? companies are realizing a 9 per cent cost saving and a 15 per cent increase in capacity and quality through global outsourcing (Casale? 1996; Crane? 1999). There is enormous pressure on major corporations to establish competitive positions in a global marketplace.

The global imperative for outsourcing

The global imperative for outsourcing accelerates as firms evolve from sellers of products and services abroad to setting up operations in foreign countries and staffing those operations with host country or their party nationals (Buss? 2005? 24). Most corporations believe that in order to compete globally? they have to look at efficiency and cost containment rather than relying strictly on revenue increases. As companies seek to enhance their competitive positions in an increasingly global marketplace? they are discovering that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core businesses (Bender? 1999? 55).

However? global outsourcing does encounter some downfalls and problems. First of all? outsourcing usually reduces a company's control over how certain services are delivered? which in turn may raise the company's liability exposures. Companies that outsource should continue to monitor the contractor's ...