Classification of Outsourcing Phenomena in Financial Services

Financial service companies have developed a wide variety of outsourcing phenomena over the course of recent years. The goal of this paper is to conceptualize these phenomena to the extent that they can be specified in descriptive dimensions, thus making it possible to differentiate between different outsourcing scenarios. This classification will form the basis for the subsequent development of scenario-specific methods. Only then will it be possible for companies in the financial services sector to depart from their previous approach to outsourcing which up to now has largely been individual if not intuitive in many cases. Instead, they will be able to systematically analyze which outsourcing scenario applies to them, and adopt methods developed for the respective scenario while drawing on the experiences of other companies in comparable situations. Based on interviews and the discussion of related work, a four dimensional framework and appropriate scales are proposed. Using references to the “outsourced components”, “outsourced activities”, “service individualization” and “degree of independence” dimensions, respectively, various current outsourcing phenomena are then classified

An Analysis Of Business Process Outsourcing Strategies Of Public And Private Sector Banks In India

This paper is a study of the recent trends of Business Process Outsourcing (BPO) strategies and practices among banking institutions in India.  The study attempts to analyze BPOs used by private and public banks using four dimensional descriptive conceptual dimensions of outsourcing:  1) shoring model (vendor location/service creation), 2) sourcing model (vendor type), 3) engagement model (number of vendors engaged), and 4) duration of the engagement (contract period).  The comparison of results reveals similar trends of outsourcing for public and private banks. However, public banks are more regulated, and thus are restricted from outsourcing of certain processes to avoid excessive risks of privacy of data and information related to customers.  From a financial strategic point of view, in the long run, the underlying profit margins of a public bank might have adverse effects. &nbsp

Unlocking path dependencies in Business Process Outsourcing decision making

The objective of this study is to examine the decision process and outcome at the end of an outsourcing contract and how this process evolves over time. Despite the vast amount of literature in IS Outsourcing, little is known about the determinants, the process, the context and the outcome of the last phase in an outsourcing relationship. In order to better understand the complexity and dynamics of the contract termination or extension, we will apply a process-theoretic logic. It draws on Path Dependence Theory which suggests that path decisions are rooted in circumstances or events that take place in precedent phases of the outsourcing process. Based on the results of 21 Business Process Outsourcing (BPO) cases, our findings confirm the existence of significant path-dependencies which lead to sub-optimal economic results. Once a business process has been outsourced, the client organizations get literally locked-in the chosen path and tend to continue the contract with the vendor, even if initial expectations did not accrue. In order to better understand the pattern of such path trajectories, a process model will be presented which integrates distinct stages of the service delivery phase, the expectations of the client organizations, and internal as well as external stimulation events that lead to expectation gaps. These stimulation events are necessary but non-sufficient conditions for breaking the path. In addition, significant resource commitments from the clients’ perspective are required for breaking the path. If these commitments are not be made, the lock-in situation prevails, i.e. back-sourcing or a vendor change is unlikely to take place

Exploring Strategic Innovation in a Business Services Outsourcing Context: Client and Provider Perspectives

Business services outsourcing engagements, typically comprising the transfer of information technology and other supporting business functions, are traditionally leveraged for cost savings. Recently, there has been a shift in demands towards strategic innovations that may substantially improve a client’s competitive position. Two research questions are addressed: (1) How has existing research conceptualised the strategic innovation through outsourcing process and how have reference theories been applied?, and (2) how can high degrees of organisational readiness be created for strategic innovation initiatives in outsourcing from a (a) client perspective and (b) provider perspective? A conceptual study in form of a theoretical literature review is developed to respond to the first research question. The fragmented research landscape is consolidated by capturing insights from 95 papers, published between 1998 and 2020. Thematic analysis findings are integrated in a four-phase framework. Based on the review, the gap tied to the second research question is carved out. Specifically, virtually no research has yet explored the formation of organisational readiness for strategic innovation initiatives in an outsourcing context. Responding to the second research question requires the exploration of notable factors in the outsourcing project, organisational and market environment, that influence the readiness of organisational members to support the implementation of strategic innovation initiatives. Two qualitative case studies are conducted, one involving a care hospital, the other involving a service provider. Organisational change readiness theory is used as theoretical lens. A framework is developed that accommodates identified readiness-influencing factors. Findings further indicate that readiness levels evolve and may decline during an initiative’s implementation due to unforeseen disturbances. Corrective measures are then required. This thesis offers two major contributions to the Information Systems sourcing research stream, namely a comprehensive theoretical review of existing innovation through outsourcing literature, and the identification of readiness-influencing factors from a client and provider perspective