Outsourcing and financial performance: A negative curvilinear effect

This study asks how a firm's degree of outsourcing across all activities influences financial performance. We argue there is an optimal degree of outsourcing, where firms outsource some activities yet integrate others, and that deviations lower performance in a negatively curvilinear fashion. We find empirical support, using 1995 and 1998 data on a sample of manufacturing businesses in the Netherlands, and show that the steepness of the curve increases under conditions of high uncertainty. We show the magnitude of the uncertainty effect on performance outcomes through a post hoc scenario analysis. Thus we provide a specific, theoretically and empirically grounded prediction of how outsourcing affects performance with implications for theory and practice

The Benefits and Dangers of out Sourcing on Employees in an Emerging Economy

This paper presents the findings of the benefits and dangers of outsourcing in an emerging economy using hr managers selected public and private sectors as case studies. The aim of the study was to determine the impact of outsourcing on the employees. The findings suggested that although it has positive outcomes in achievement of organizational goals, employees are weakened by the negative impact of outsourcing as it increases job insecurity, demotivation in the organisation. The significance of the study was to highlight the impact of outsourcing on employees and its relation with management although there’s not much empirical evidence, this paper thus addresses this issue. It is hoped that this study would add to knowledge, create awareness, refine the existing practices in the organisation and change the attitudes of employees for better performance and organizational success

Outsourcing of logistics : a survey of the practices of medium and large kenyan manufacturing firms

A research project in partial fulfillment of the requirements for the degree Master of Business and Administration (MBA), Faculty of Commerce, University of NairobiThe tough economic times in the country have endeared firms to reconsider their options in order to acquire and sustain competitive advantage. To ensure this, they have adopted a number of strategies. There has been a move to strategically manage the operations of the business unit that demands the evaluation of core activities and Competencies as to stay in what the firm-does best or what is the 'raison d'etre' of the firm. However the other activities found to be either non-core or that the firm does not do well still have-to be done. This has led to the outsourcing of these activities to other firms in the industry that could do these activities better and contribute positively in the value addition function of the organisation. Logistics has been identified as one of the functions that are very frequently outsourced by firms. Indeed the study found that about 80% o fthe firms surveyed outsourced at least one activity in the logistics function.The study found that both medium and large sized firms equally outsource logistics services and the ownership of the firm does not have a significant influence on the prevalence of outsourcing of logistics services in Kenyan firms, Firms quoted three reasons as being most influential in outsourcing of the logistical activities. The first one is the need to avail time for other crucial activities for managers. The second is the need to reduce overall cost and the third, the need to make use of the expertise of service providers. The triggers found to lead to outsourcing were the need to improve overall efficiency, need to focus on the core business and the demand from customers for a higher service level. The study found that staff resistance to change was the factor that was an obstacle to the implementation of outsourcing of logistical services. The surveyed firms did not identify any serious pitfalls in the outsourcing of logistical services in Kenya.The evidence for a partnership relationship is not very strong; hence, Kenyan firms need to strengthen their relationship with suppliers for optimal realisation of benefits and value addition for customers. The area of e-logistics is not well developed in Kenya hence investment in the sector could boost trading and enhance operational effectiveness.Outsourcing of logistics if carried out properly is a very important practice for firms in Kenya that may want to maintain competitive advantage in the industry.The tough economic times in the country have endeared firms to reconsider their options in order to acquire and sustain competitive advantage. To ensure this, they have adopted a number of strategies. There has been a move to strategically manage the operations of the business unit that demands the evaluation of core activities and Competencies as to stay in what the firm-does best or what is the 'raison d'etre' of the firm. However the other activities found to be either non-core or that the firm does not do well still have-to be done. This has led to the outsourcing of these activities to other firms in the industry that could do these activities better and contribute positively in the value addition function of the organisation. Logistics has been identified as one of the functions that are very frequently outsourced by firms. Indeed the study found that about 80% o fthe firms surveyed outsourced at least one activity in the logistics function.The study found that both medium and large sized firms equally outsource logistics services and the ownership of the firm does not have a significant influence on the prevalence of outsourcing of logistics services in Kenyan firms, Firms quoted three reasons as being most influential in outsourcing of the logistical activities. The first one is the need to avail time for other crucial activities for managers. The second is the need to reduce overall cost and the third, the need to make use of the expertise of service providers. The triggers found to lead to outsourcing were the need to improve overall efficiency, need to focus on the core business and the demand from customers for a higher service level. The study found that staff resistance to change was the factor that was an obstacle to the implementation of outsourcing of logistical services. The surveyed firms did not identify any serious pitfalls in the outsourcing of logistical services in Kenya.The evidence for a partnership relationship is not very strong; hence, Kenyan firms need to strengthen their relationship with suppliers for optimal realisation of benefits and value addition for customers. The area of e-logistics is not well developed in Kenya hence investment in the sector could boost trading and enhance operational effectiveness.Outsourcing of logistics if carried out properly is a very important practice for firms in Kenya that may want to maintain competitive advantage in the industry

Les Facteurs Clés de Succès de l'Externalisation Logistique: Cadre Conceptuel

One of the biggest emerging sectors in economics is logistics outsourcing. The number of outsourcing organizations and logistics service providers has exploded, resulting in a fierce competition. Both outsourcing firms and service providers faced profound challenges in their outsourcing endeavors. To take full advantage of the outsourcing potential, outsourcing organizations require a deeper awareness of the success and failure elements, as well as the risks that go along with them. On a financial, organizational, and operational level, the benefits of outsourcing logistics activities are diverse and complex. However, it is equally true that it conceals considerable dangers that businesses must consider before making a decision. Indeed, this decision-making causes significant long-term organizational and structural changes to the company that makes it, and even if resumption of operations is still possible, the corporation will have to pay very expensive "reintegration costs". This requires making in-depth research into the suitability of this strategy as well as the circumstances for its success prior to making a decision in order to get a good return on investment. In this context, the purpose of this paper is to provide a general overview of logistics outsourcing by identifying the factors that influence the success and performance, drawing on transaction and resource cost theory and other empirical studies.     JEL Classification: D21, L21, L25, P17 Paper type: Theoretical ResearchL'externalisation de la logistique est l'un des plus grands secteurs émergents de l'économie. Le nombre de prestataires de services logistiques a explosé, entraînant une forte concurrence. Les entreprises qui externalisent ces activités logistiques et les prestataires de service logistique ont dû faire face à des challenges dans leurs projets d'externalisation. Pour tirer profit du potentiel de l'externalisation, les entreprises qui externalisent ces activités logistiques doivent être conscientes des facteurs de succès et d'échec, ainsi que des risques qui les accompagnent. Sur le plan financier, organisationnel et opérationnel, les avantages de l’externalisation des activités logistiques sont diversifiés et complexes. Cependant, il est tout aussi vrai qu’elle cache des dangers considérables que les entreprises doivent prendre en considération avant de prendre une décision. En effet, cette prise de décision provoque d’importants changements organisationnels et structurels à long terme pour l’entreprise qui le fait, et même si la reprise des opérations est encore possible, la société devra payer des "coûts de réintégration très coûteux". Pour ce faire, il faut effectuer des recherches approfondies sur la pertinence de cette stratégie et sur les circonstances de son succès avant de prendre une décision afin d’obtenir un bon rendement du capital investi. Dans ce contexte, l’objectif de cet article est de fournir un aperçu général de l’externalisation logistique en identifiant les facteurs qui influencent le succès et la performance, en s’appuyant sur la théorie des coûts de transaction et des ressources et d’autres études empiriques.     Classification JEL: D21, L21, L25, P17 Type de papier: Article Théoriqu

The outsourcing debate: Theories and findings

This paper addresses the issue of services outsourcing by looking at both theoretical and empirical arguments. Previous debates have often concentrated on the motives for adopting the practice rather than the outcomes. These various themes can be discussed under the twin concepts of the cost and efficiency argument and the fashion and isomorphism approach. Our research provides strong evidence to support the cost efficiency argument. On average, significant cost advantages were sought and delivered, as well as improvements in service levels and systems. Many organisations in the current environment in Australia look at outsourcing not only as a method of increasing efficiency but also as gaining competitive advantage through harnessing the superior specialist skills and experience of the outsourcing provider who takes someone's back office function and transforms them into their front office. A 10% net cost saving was considered necessary by an organisation before embarking on an organisational change that was disruptive and in some cases involved downside risks. Even if other efficiency gains such as service levels or systems improvements were required, so were 10%+ cost savings. A number of the organisations thought their skills in managing outsourcing had improved considerably such that they were in a position to move from a client/server relationship to a partnership model (i.e. an alliance)

Analyzing the Effect of Outsourcing by SMEs on Company’s Performance Moderating Role of Risks Associated with Decision of Outsourcing: Evidence from SMEs operating in Karachi

Outsourcing is a strategy which is even treated as a risk free for the conduction of business but the decision might not always ensure desired quality and results. Thus there is significant need of evaluation of outcomes associated with outsourcing decision, especially in Under Developed Countries (UDC) and Least Developed Countries (LDC) where there is significant lacking of research work on this strategy. Thus the aim of this research is to check the results associated with outsourcing in terms of its importance, especially for the most important sector of Pakistan’s economy (SMEs). Thus data has been collected from all those who are working on managerial positions in SMEs operating in Karachi and after detailed statistical testing through AMOS it has been revealed that outsourcing is fruitful for SMEs but results might be different for different types of SMEs  as well as if we analyze small enterprises and medium enterprises on separate basis.. Keywords: Outsourcing, SMEs, Cost, Quality, Firms Performanc

Assessing Financial Efficiency with Time-Driven Activity-Based Costing (TDABC) Model: Evidence from International Trading Companies

The allocation of indirect cost associated with a particular service in the most accurate way gives many different options. Understanding logistics process in terms of cost and profitability is a complex task, and there is need to more research in such bases. Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation. With traditional cost systems giving inaccurate results as operations change, there is the need for organizations to implement modern costing annalistic models which can easily be integrated in cases of update on cost drivers or expenditure. In this paper, theories underlying Time-Driven Activity-Based Costing (TDABC) model have been used in a form of case study stimulation to examine how overhead cost can be properly allocated in organizational departments. The author attempts to implement the generic steps of the TDABC cost model as presented by Kaplan and Anderson in a case study to measure the financial efficiency of a logistics procumbent company based in china with clients mostly based in Africa.Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation Keywords: efficiency; TDABC; capacity costs; outsourcing; logistics procurement, international trade, Logistics Service providers, Fourth-party logistics service providers (4PL) DOI: 10.7176/JRDM/76-01 Publication date:June 30th 202

Tecnologia: um recurso estratégico no processo de externalizar

Ainda que o desenvolvimento das tecnologias de informação se tenham demarcado nestes últimos vinte anos como algo de verdadeiramente revolucionário que pode desencadear mudanças radicais na sociedade, isto não pode ser suficiente para determinar a estrutura da sociedade em geral e das organizações do trabalho em particular. Pretende-se assim mostrar que ainda que a inclusão de tecnologia possa ser benéfica para as organizações, o desenvolvimento de estratégias deve ser visto de um ponto de vista integrado juntando criatividade e sinergias que funcionem como companheiras naturais da vantagem competitiva. Neste contexto, o “Outsourcing” surge como um componente fundamental do processo estratégico, que muito embora possa incluir ou não tecnologia, terá sempre de ser visto como algo revolucionário no desenvolvimento de novos serviços em termos de eficiência operacional