A Combined Model of IT Outsourcing Partnerships and Success

Outsourcing has the potential to decrease costs, increase focus, improve productivity, add flexibility and innovation, and increase operating income by taking advantage of another organization’s expertise, innovation, or cheaper labor. However, many managers have admitted that outsourcing initiatives have not fulfilled many of their expectations. Furthermore, studies have reported that more than half of outsourcing relationships fail within the first five years of implementation. This paper introduces a comprehensive theoretical model that combines two models proposed previously by Lee and Kim (1999) and Alborz, Seddon, and Scheepers (2003). Both models include sets of factors believed to influence the quality of the outsourcing partnership and, in turn, influence outsourcing success. This paper also extends these two works by proposing two important missing factors: Process Factors and Cultural Factors. The model presented in this paper should be of interest to both practitioners and researchers. For managers in an organization, the proposed model attempts to reduce the complexity of an outsourcing relationship so that both partners can focus on the most important factors that have the greatest potential to increase the likelihood of success. For IS researchers, this paper provides a new theoretical model grounded upon previous research to offer a more comprehensive framework to guide discussion and future research

Digitalization and IT Backsourcing: Towards a Transformational Model for the German Automobile Industry

Many organisations are now confronted with the new phenomenon of digitalization and are faced with the challenge of formulating and implementing a company-wide digital transformation strategy. Digitalization is associated with significant and extremely rapid change, and, in some cases, even the replacement of established business models. In manufacturing companies, this transformation is part of what is often termed Industry 4.0 and, in large companies, where the provision of information technology (IT) has hitherto been outsourced (in whole or in part), the introduction of these new technologies may be the catalyst for IT backsourcing. This entails bringing previously outsourced activities back in-house to regain ownership and control, in order to be more flexible and respond more effectively to rapidly changing demands. This study reviews the extant literature to assess existing thinking on the motivation for backsourcing, and then examines the potential role of digitalization in driving IT backsourcing in the German automotive industry. A provisional conceptual framework for subsequent research is put forward, using a knowledge-based view of the firm. The study is in its initial stages, but the model is being developed through more in-depth interviews to provide operational guidance for practitioners and subsequent research studies

Contracting for IT Outsourcing with Asymmetric Information

IT outsourcing allows a business to reduce the cost of IT service delivery and improve the quality of IT service by taking advantage of the service provider’s economics of scale and technical expertise. However, the successful outsourcing of IT service is hampered by lack of guidance on how to design incentive contracts to encourage performance of the service provider, especially in the presence of information asymmetry and incentive divergence. In this article, we identify and characterize two asymmetric information factors: asymmetric effort information and asymmetric capability information. Depending on whether the service provider’s effort information and capability information is symmetric or not, we consider three information scenarios and characterize optimal incentive contracts for each scenario. We also introduce the concept of information value to quantify the adverse effects of the two asymmetric information factors. The results provide theoretical support for designing incentive contracts that mitigate the adverse effects of asymmetric information, and recommend effective guidance for activities so as to reduce the degree of information asymmetry

Advantages and Disadvantages of Maintenance Outsourcing in Manufacturing Companies: With Special References to Jubail Industrial City – KSA

The research study presents, discusses and offers understanding on outsourcing, the most important benefits (advantages) and potential risks (disadvantages) associated with-in. It emphasizes the outsourcing specialized maintenance activities and its role in business success. In this research, a hypothesis were develop whether the benefits of outsourcing maintenance in manufacturing companies are more than expected risk associated on this. Overall result of the survey ruled out that outsourcing provides more advantage than disadvantage in a manufacturing industry. Manufacturing industry is the major contributor to the Kingdom's economy wherein Jubail is the largest industrial city in the Middle East. This is also the home of Middle East's largest and world's fourth largest petrochemical company. Outsourcing maintenance has been one of the pillars of manufacturing industries in Jubail as become apparent thru the outcome of the study. The research has paved a way for everyone who are engaged in outsourcing maintenance in providing them wise decision making. Managers need to contemplate maintenance outsourcing if it provides potential advantage to their company. Contractor qualification classifications established on the set conditions done by the government is recommended. More studies regarding maintenance outsourcing is needed in the academics as well as in advance forums. The author has successfully developed statistical survey wherein the respondents are professionals, engineers and management of prestigious manufacturing industries in Jubail, It is an impressive feedback that majority of manufacturing industries most likely practice and recommend outsourcing for the maintenance. 84.6% of the overall respondents practice outsourcing in the manufacturing industries and 80.0 % of them is highly recommending outsourcing here in Jubail Industrial City. Likewise, the author recommended future expanded studies interrelated with outsourcing and maintenance. Keywords: Outsourcing, Maintenance, Manufacturing Industries. Jubail Industrial City

Digitalization and IT Backsourcing: Towards a Transformational Model for the German Automobile Industry

Many organisations are now confronted with the new phenomenon of digitalization and are faced with the challenge of formulating and implementing a company-wide digital transformation strategy. Digitalization is associated with significant and extremely rapid change, and, in some cases, even the replacement of established business models. In manufacturing companies, this transformation is part of what is often termed Industry 4.0 and, in large companies, where the provision of information technology (IT) has hitherto been outsourced (in whole or in part), the introduction of these new technologies may be the catalyst for IT backsourcing. This entails bringing previously outsourced activities back in-house to regain ownership and control, in order to be more flexible and respond more effectively to rapidly changing demands. This study reviews the extant literature to assess existing thinking on the motivation for backsourcing, and then examines the potential role of digitalization in driving IT backsourcing in the German automotive industry. A provisional conceptual framework for subsequent research is put forward, using a knowledge-based view of the firm. The study is in its initial stages, but the model is being developed through more in-depth interviews to provide operational guidance for practitioners and subsequent research studies

Digitalization and Evolving IT Sourcing Strategies in the German Automotive Industry

Digitalization and major changes in core business products and processes are now sweeping through the global automotive industry, and many automotive companies are confronted with the challenge of formulating and implementing a company-wide digital transformation strategy. Digitalization is associated with significant and extremely rapid change, and, in some cases, even the replacement of established business models. This transformation is part of what is often termed Industry 4.0 and, in large companies, where the provision of information technology (IT) has hitherto been outsourced, the introduction of these new technologies may be the catalyst for a major re-think of IT sourcing strategy. This may entail bringing previously outsourced activities back in-house – a process known as backsourcing - to regain ownership and control, in order to be more flexible and respond more effectively to rapidly changing demands. This study reviews the extant literature on the motivation for backsourcing, and then examines the potential impact of digitalization on IT sourcing in the German automotive industry. A conceptual framework for subsequent research is put forward, using a knowledge-based view of the firm. In addition, following preliminary feedback from interviewees, an initial model for analyzing change in IT sourcing strategy is proposed. The model is being developed through more in-depth interviews to provide operational guidance for IT management and strategists in the German automotive industry

Strategies in Outsourcing R&D Processes to Maintain Market Competitiveness

In the 21st century, managing outsourced research and development (R&D) processes is critical to an organization\u27s success. Guided by the logistic outsourcing theory developed by de Boer, Gaytan, and Arroyo, the purpose of this single case study was to explore strategies and processes organizational leaders used to manage outsourced R&D to maintain market competitiveness. Semistructured interviews were conducted with 5 purposefully selected business leaders who were responsible for outsourcing R&D in a single Fortune 500 corporation in the Mid-Atlantic region of the United States. Company records were also gathered as data. Yin\u27s 5-step process for a case study and key words in context analysis were used to analyze the data. Findings included 3 main themes: (a) the outsourcing decision-making process with internal and external constraints, (b) the effectiveness of managing outsourcing services and processes, and (c) the influence of outsourcing on business effectiveness and new products. Findings also indicated no practical system to measure effectiveness of outsourced R&D services on market competitiveness. The lack of measurement effectiveness was due to a lack of processes in place to measure R&D performance and no practical approach to measure impact of R&D on market competitiveness. Findings offered insight into strategies used by business leaders to manage outsourced R&D processes. Findings may also have implications for positive social change such as impacting communities through employment, generating government revenues through taxes, and creating a positive impact on job creation in the industries that promote R&D outsourcing

Strategies in Outsourcing R&D Processes to Maintain Market Competitiveness

In the 21st century, managing outsourced research and development (R&D) processes is critical to an organization\u27s success. Guided by the logistic outsourcing theory developed by de Boer, Gaytan, and Arroyo, the purpose of this single case study was to explore strategies and processes organizational leaders used to manage outsourced R&D to maintain market competitiveness. Semistructured interviews were conducted with 5 purposefully selected business leaders who were responsible for outsourcing R&D in a single Fortune 500 corporation in the Mid-Atlantic region of the United States. Company records were also gathered as data. Yin\u27s 5-step process for a case study and key words in context analysis were used to analyze the data. Findings included 3 main themes: (a) the outsourcing decision-making process with internal and external constraints, (b) the effectiveness of managing outsourcing services and processes, and (c) the influence of outsourcing on business effectiveness and new products. Findings also indicated no practical system to measure effectiveness of outsourced R&D services on market competitiveness. The lack of measurement effectiveness was due to a lack of processes in place to measure R&D performance and no practical approach to measure impact of R&D on market competitiveness. Findings offered insight into strategies used by business leaders to manage outsourced R&D processes. Findings may also have implications for positive social change such as impacting communities through employment, generating government revenues through taxes, and creating a positive impact on job creation in the industries that promote R&D outsourcing