Antecendents and Consequences of Modularization in BPO - Based on Transaction Cost Theory and Knowledge-based Theory

Business process outsourcing (BPO) is expected to be “the next big wave” in the development of information technology services. However, managing the tacit knowledge underlying the interfaces is costly and complicated. Modularization of the outsourced business process can mitigate such complexity and the risk of knowledge misappropriation. This research-in-progress paper introduces the concept of modularization of outsourced business process (MOBP), which is viewed as the operational concept of “modular global sourcing” proposed by Infosys, a leading Indian outsourcing provider. Standing the position of the client firm, we examine the antecedents and consequents of MOBP based on transaction cost economics theory and knowledge-based theory. We explore the impacts of process human asset specificity, environmental uncertainty, behavioral uncertainty, small-number trading, strategic criticality of process knowledge, and process knowledge ambiguity on the extent of MOBP and also the impacts of MOBP on cost reduction and knowledge spillover. This paper also describes the research plan to test the research hypotheses. Contributions to research and practice are highlighted

An Integrative Conceptual Model of Vietnam as an Emerging Destination for Offshore Outsourcing of Software Development for Finnish Companies

Companies are constantly under pressure to develop software within tight budgets and more efficiently. Offshore outsourcing has been seen as one solution to the dilemma, and lucrative outsourcing businesses have evolved in many countries. Vietnam is now emerging within this global outsourcing sector. This study conducts an in-depth literature review and analyzes a number of important issues related to developing countries in general and Vietnam in particular, as an offshore outsourcing destination for Finnish companies for developing their software. From the analysis, an integrative conceptual model of software development through offshore outsourcing was developed. The study found challenges as well as potential in Vietnam’s software outsourcing industry. In addition, it provides valuable information for practitioners interested in outsourcing to Vietnam and for further research within the area

Prudential regulatory governance of the risks associated with IT multi-sourcing strategies within the Australian banking sector

Concerns about the adequacy of the Australian Prudential Regulatory Authority (APRA) prudential standards to govern the risks associated with the Australian banks’ multi-sourcing IT service delivery strategies provided the motivation for conducting this study. Three research questions were developed to investigate prudential risk management in the banking sector of the Australian Financial Services Industry (AFSI). RQ1: Do the banks employ complex multi-sourcing solutions driven by business unit demands to deliver their IT services? RQ2: What are the risk and governance model/s used by the banks to manage risks associated with their IT services multi-sourcing strategy? RQ3: Is the AFSI IT operational risk exposure adequately covered by the current APRA risk framework and prudential standards? The two largest Australian banks, Commonwealth Bank of Australia (CBA) and Westpac Banking Corporation (WBC) referred to as the ‘banks’ in this research are selected as the sample. CBA and WBC are the first and second largest banks when measured by capitalisation within the banking sector of the AFSI and represent 43 percent sample of the capitalisation value of the AFSI. Although profitable, the banks are under pressure from the market to reduce their cost-to-revenue ratio. One of the main strategies the banks employ to reduce IT costs is the outsourcing the delivery of IT services. Over the past five years a trend has evolved with the banks using offshore-outsourcing to deliver IT services and gain further IT savings. However little empirical research has investigated what impact this trend has had on the risk profile of the banks and the Australian banking sector as a whole. This research identified and investigated the different IT services delivery models adopted by the banks by analysing on the relevant literature and documentation available in the public domain in relation to the AFSI. The findings of this research developed a picture of the IT delivery landscape within the banking sector of the AFSI. Findings of this research also demonstrates the complexity of the banks operational environment which can be attributed to the banks’ introduction of their IT multi-sourcing strategies. Finally the findings of this research raise some questions about whether the risks associated with an increasing reliance on IT multi-sourcing to deliver IT services is adequately managed by Australian banking sector and the regulatory framework of APRA

A Collaborative Model Of Offshore Legal Outsourcing

International outsourcing has come to the legal profession. The ABA and other bar associations have given it their stamp of approval, and an ailing economy has pushed both clients and firms to consider sending more legal work abroad. This article integrates research from the fields of organizational behavior, social psychology, and economic theory to analyze the effectiveness of the legal outsourcing relationship. It identifies organizational pressures in the practice of law that affect how legal work is performed in a transnational context, and it examines how individuals on both sides of the outsourcing process influence the success or failure of a globalized practice. Ultimately, the article recommends that parties involved in legal offshoring should move away from a model of disaggregation and toward a model of collaboration. Unlike a disaggregation model that assumes outsourcing vendors will autonomously complete discrete legal tasks, a collaborative model would explicitly focus on cooperation, communication, and renegotiation of status and resources

A Collaborative Model Of Offshore Legal Outsourcing

International outsourcing has come to the legal profession. The ABA and other bar associations have given it their stamp of approval, and an ailing economy has pushed both clients and firms to consider sending more legal work abroad. This article integrates research from the fields of organizational behavior, social psychology, and economic theory to analyze the effectiveness of the legal outsourcing relationship. It identifies organizational pressures in the practice of law that affect how legal work is performed in a transnational context, and it examines how individuals on both sides of the outsourcing process influence the success or failure of a globalized practice. Ultimately, the article recommends that parties involved in legal offshoring should move away from a model of disaggregation and toward a model of collaboration. Unlike a disaggregation model that assumes outsourcing vendors will autonomously complete discrete legal tasks, a collaborative model would explicitly focus on cooperation, communication, and renegotiation of status and resources

Organizational Responsiveness to Anti-offshoring Institutional Pressures

This study explores the extent to which organizations are responsive to pressures from institutional constituents against offshoring of information technology and business processes. Drawing on a theoretical framework that integrates institutional and strategic explanations, it proposes that organizational responsiveness to anti-offshoring institutional pressures is a function of both the characteristics of such pressures as well as organizations’ prior success with offshoring. Results based on moderated hierarchical multiple regression analyses on survey data from 84 offshoring client organizations indicate the following. First, both greater organizational expectations of enhanced social legitimacy obtained from compliance and mimetic influences from other organizations led to greater organizational responsiveness. Second, despite the strong precedent, organizational dependence on a key pressuring constituent had no effect. Third, both conflict of institutional expectations with organizational goals and greater regulatory environment uncertainty reduced responsiveness. Fourth, surprisingly, organizational success with offshoring had no direct effect on responsiveness. However, it attenuated the otherwise strong positive effect of social legitimacy and exacerbated the negative effect of regulatory environment uncertainty. Implications of these findings for research and practice are discussed

Critical Success Factors in the Offshore Business Process Outsourcing of Debt Collection to India

This research identifies critical success factors for the offshore business process outsourcing of debt collection to India. It develops a critical success factor model for offshore debt collection incorporating the new concept of Opaque Indifference. Opaque Indifference is a series of constructed states eliminating negative cues for debtors dealing with offshore debt collectors. The research contributes to the existing literature by applying information systems outsourcing theory to the offshore business process outsourcing of debt collection

Development and validation of a conceptual framework for IT offshoring engagement success

“A thesis submitted to the University of Bedfordshire, in partial fulfilment of the requirements for the degree of Doctor of Philosophy”.The study presented in this thesis investigates Offshore Information Technology Outsourcing (IT offshoring) relationships from clients’ perspective. With more client companies outsourcing their IT operations offshore, issues associated with the establishment and management of IT offshoring relationships have become very important. With the growing volume of offshore outsourcing, the numbers of failures are also increasing. Therefore, both clients (service receivers) and suppliers (service providers) face increasing pressure to meet with the objectives of IT offshoring initiatives. Improving the quality of the relationship between client and supplier has frequently been suggested in the literature as probable solution area, however not much literature and empirical evidence is available in this respect. The aim of the study is to make a theoretical and practical contribution by studying the interplay between the critical factors influencing the relationship intensity level of the exchange partners and suggest measures that can potentially increase the success rate in IT offshoring engagements. The objectives of this study are: 1. To identify the relevant critical factors and explore its causes and effects (antecedents and consequences) on the relationship intensity significance level. 2. To develop an integrated conceptual framework combining the hypothetical relationship among these identified critical factors. 3. To empirically validate the conceptual framework. To accomplish the first objective and building the theoretical platform for the second objective, three research questions are identified and answered through empirical study backed by literature evidence. The second objective is addressed through an integrative conceptual framework by analysing the related studies across other disciplines, gaps in the existing theories and models in the outsourcing literature. Coupled with literature gap analysis, the researcher adopted some of the relevant features from across various disciplines of management and social sciences that are relevant to this study. After that, the third objective, the research hypotheses are validated with empirical examination conducted in Europe. Seven research hypotheses are developed based on literature analysis on the relationship of the key constructs in the conceptual framework. This study is explanatory and deductive in nature. It is underpinned mainly by a quantitative research design with structured questionnaire surveys conducted with stratified sampling of 136 client organisations in Europe. Individual client firm is the unit of analysis for this study. Data analysis was conducted using partial least squares (PLS) structural equation modelling techniques. In this research, empirical support was found for most of the research hypotheses and conclusions of the study is derived. An investigation into trust as a concept is used to denote relationship intensity, as the central construct of the framework. The validated conceptual framework and tested hypothesis results are the main contributions of this study. The results of this study will also be useful in terms of adopting the conceptual framework linked with hypotheses as a point of reference to begin with, in order to accomplish a healthy exchange relationship. However, a further deep dive and fine tuning the sub-units/composition characteristics of each critical factor may be needed for individual outsourcing initiative(s). This study is particularly relevant to the client-supplier firms already engaged in a relationship but can also be useful to those clients who are planning to begin their journey in IT offshoring in the near future, as a preparatory platform

Managing IT outsourcing risks: the case of large organisations in South Africa.

Masters Degree. University of KwaZulu-Natal, Durban.Information technology (IT) is significant to achieving business objectives. Despite the significance of IT to the business, organisations are outsourcing the whole, or part thereof, of their IT department to reduce cost and focus on the core of their business. The outsourcing of IT, however, comes together with risks such as vendor lock-in, loss of control and information breaches that could lead to IT outsourcing (ITO) failure. If these risks are not properly identified and managed, organisations will remain vulnerable. While studies have been conducted on ITO and risk management, very few have conducted exploratory research to address how to manage the risks of ITO. Hence, using a qualitative approach, this study explored how large organisations manage the common risks of ITO. These risks are the operational risk, business continuity risk, data privacy risk and compliance risk of the IT Service Provider (ITSP). The study further explored the impact of these risks on large organisations and the mitigating controls organisations can have in place to reduce their impact and likelihood of occurrence. Interviews, which were recorded, was conducted with 12 experts from two large organisations in South Africa. The recorded interviews were transcribed, coded using NVivo software and analysed using thematic analysis. The main themes of this study were governance, develop ITO risk profile, ITSP audit, risk treatment, and assurance. Findings show that organisations need to constitute a Risk Management Committee with a substantial level of experience in the management of risks and ITO. This is to ensure the effective identification, assessment and treatment of ITO risks. Furthermore, the constituted Risk Committee must conduct verification exercises to identify the inherent risks of ITO. They must also conduct maturity assessment and business impact analysis (BIA) in assessing the probability of occurrence and impact of ITO risks. The Committee must establish technical and administrative controls in mitigating the risks of ITO. The findings further show that organisations must integrate risk governance and assurance polices in their ITO risk management strategy to continuously monitor residual risks and identify potentially new risks. A governance Framework for IT Service Provider Risk Management (ITSPRM) that may serve as a guide in the effective management of ITO risks was also developed and presented