Offshore Outsourcing: Risks, Challenges, and Potential Solutions

Performance Evaluation of Construction Sub-contractors using Ordinal Priority Approach

The construction industry has been recognized as one of the crucial industries of a country. In large-scale public projects, it is frequently observed that the client, who serves the public, seeks the services of several sub-contractors (project outsourcing firms) to execute projects. It also seeks the consulting firms' services to monitor the progress and performance of these sub-contractors. However, performance evaluation of a large number of sub-contractors is not only a challenging phase but also a source of conflict and mistrust between the evaluators and evaluatees because of the subjectivity in the evaluation process. The current study classifies perceived organizational performance into two streams, arguing that the one involving the opinions from the independent evaluators is more objective than the self-evaluation one. The study also makes a pioneering attempt in post-qualification performance evaluation of sub-contractors through the Ordinal Priority Approach (OPA), a promising multi-attribute decision-making methodology. The deployment of the OPA allows the decision-makers to estimate the weights of the evaluation criteria, the sub-contractors to be evaluated, and the experts who evaluated them simultaneously. Thus, the methodology can minimize the causes of mistrust by uncovering unreliable experts and inappropriate criteria. Also, a novel Relative Performance Index (RPI) has been proposed to standardize the performance evaluation system. The results show that evaluation of the firms does not end at their evaluation as without evaluating the evaluators, such an evaluation is only partially effective.

Challenges and practices identification in complex outsourcing relationships: A systematic literature review

Complex IT outsourcing relationships aptitude several benefits such as increased cost likelihood and lowered costs, higher scalability and flexibility upon demand. However, by virtue of its complexity, the complex outsourcing typically necessitates the interactions among various stakeholders from diverse regions and cultures, making it significantly more challenging to manage than traditional outsourcing. Furthermore, when compared to other types of outsourcing, complex outsourcing is extremely difficult because it necessitates a variety of control and coordination mechanisms for project management, which proportionally increases the risk of project failure. In order to overcome the failure of projects in complex outsourcing relationships, there is a need of robust systematic research to identify the key challenges and practices in this area. Therefore, this research implements systematic literature review as a research method and works as a pioneer attempt to accomplish the aforementioned objectives. Upon furnishing the SLR results, the authors identified 11 major challenges with 67 practices in hand from a total of 85 papers. Based on these findings, the authors intend to construct a comprehensive framework in the future by incorporating robust methodologies such as AHP and fuzzy logic, among others.

Outsourcing for Sustainable Performance: Insights from Two Studies on Achieving Innovation through Information Technology and Business Process Outsourcing

(1) Background: To obtain sustainable performance through outsourcing, organizations must balance the inherent tension between pursuing cost-saving initiatives (i.e., efficiency) and pursuing innovative initiatives (e.g., developing new products). This study aims to explore this tension by exploring different ways that organizations can pursue both efficiency and innovativeness, through their IT outsourcing (ITO) and business process outsourcing (BPO). (2) Methods: This study utilizes a configurational approach in two inductive studies, both using qualitative comparative analysis (QCA). The first study qualitatively compares 27 firms currently doing ITO, while the second study compares 60 firms doing either ITO or BPO. (3) Results: Our findings suggest three configurations, or combination of conditions, that enable efficiency and innovation through ITO and BPO. For ITO, firms can use a best-of-breed or a mediated multi-outsourcing configuration to enable innovation; however, firms can only use a direct multi-outsourcing configuration to enable innovation through BPO. (4) Conclusions: The study is among the first to explore both ITO and BPO practices that enable innovation and efficiency simultaneously (sustainable performance). In contrast with prior studies, all three aforementioned configurations suggest that having detailed outsourcing contracts is a necessary but not sufficient condition for innovation through outsourcing.

Management of Innovation and Intellectual Property in Outsourcing Projects

Innovation outsourcing creates two critical risks for a client firm. The first risk arises when a client discloses his/her technological knowhow and intellectual property (IP) with the service provider but the latter misappropriates the IP toward its own commercial benefit. Second, in the absence of perfect monitoring, the service provider might exert suboptimal effort on the innovation project. Management of client’s technology and innovation effort of agent are both crucially important in innovation outsourcing. It is shown that client can deter these risks by designing an appropriate contract. Two distinct regimes are considered. In Regime1, the client operates in an environment where IP cannot be protected. In Regime2, client’s IP is fully protected either due to strong legal enforcement or due to availability of a technological solution. First, it is found that an incentive payment scheme linked with project outcome can mitigate the shirking problem. Second, in Regime1, the client must provide higher compensation to the agent when compared to Regime2. A carrot and stick strategy involving higher incentive payments along with reduced sharing of background IP can deter the opportunistic behavior of the service provider. Third, if the cost of operating in Regime2 is prohibitively high, then the client can operate in Regime1 and yet obtain higher profits. In such a scenario, the client must use the carrot and stick strategy. Finally, due to predominant motive to reduce costs, clients might not be compensating their service providers appropriately. Such myopic cost-cutting strategy would exacerbate the IP misappropriation and suboptimal quality problems associated with outsourcing.

An integrated framework for prioritizing the outsourcing performance outcomes

Purpose

Outsourcing is a crucial tool for an organization to focus on its core business operations. The purpose of this study is to find critical success factors (CSFs) of outsourcing and to prioritize the performance outcomes of outsourcing because of the adoption of its CSFs.

Design/methodology/approach

This research proposes the hybrid framework of fuzzy Delphi, fuzzy analytic hierarchy process (F-AHP) and fuzzy additive ratio assessment (F-ARAS) to fulfill the research objectives. Fuzzy Delphi is used to finalize the CSFs of outsourcing and F-AHP provides the relative weights to it. F-ARAS is used to prioritize the outsourcing performance indicators with respect to CSFs. The empirical case investigation of three Indian large-scale public sector process industries is conducted to demonstrate the applicability of the proposed framework.

Findings

The result shows that increased dominance in core activity, ability to increase or decrease capacity, improved financial performance, optimized resource utilization and increased market share are the top five performance outcomes because of the adoption of outsourcing CSFs.

Research limitations/implications

Factors such as cultural, political, environmental and size of the organization may have a significant implication on the research results.

Originality/value

This is a novel approach towards the prioritization of performance outcomes of outsourcing. Moreover, the present research is a helpful tool to manage outsourcing and choosing which performance outcome of outsourcing ought to be used to measure implementation. This will help to recognize potential opportunities and preparing strategic planning for both short-term and long-term goals.

Collaborative governance strategies for a strategic offshore IT outsourcing engagement

Purpose

This research study aims to establish the significance of collaborative governance practices in creating higher business value from an offshore IT outsourcing (ITO) relationship.

Design/methodology/approach

At the outset, a Delphi technique identifies the most significant ITO success criteria from a prescribed list, which is the outcome of a review and analysis of existing research articles. Subsequently, an empirical survey captures the perceptions of provider-side middle level professionals to prioritize these significant success criteria, which are the outcome of the Delphi study. Statistical analysis of the prioritized success criteria delivers a set of success factors, which forms the basic building blocks to formulate a set of offshore governance strategies. A real-life case evidence shows the practicability of implementing the proposed strategies underlining the similar practices taken up in the past.

Findings

A set of strategies and best practices for establishing collaborative governance mechanisms within a strategic offshore ITO.

Research limitations/implications

This research study captures the perspectives of Indian service providers only.

Originality/value

This comprehensive study helps the contractual parties harness and augment the positive impacts of success factors in implementing superior contractual, relational and performance governance strategies within a strategic ITO initiative. A collaborative program management mechanism ensures the fruitful implementation of proposed strategies with the active support of top management of contractual parties. Consequently, the proposed strategies help offshore providers assess and augment their service capabilities for higher business efficiency and value creation.

Responsiveness, the primary reason behind re-shoring manufacturing activities to the UK

Purpose

Due to today’s volatile business environment companies have started to establish a better understanding of the total risk/benefit-balance concerning manufacturing location decisions of their component supply. The focus is now much more on comprehensive and strategic supply chain issues rather than simply relying on piece-part cost analysis. This has led to an emerging trend called re-shoring. The purpose of this paper is to understand the primary motivation behind the re-shoring strategy in the UK and investigate the factors that influence this decision from Indian industries perspectives.

Design/methodology/approach

The analysis of the paper is based on interviews conducted in the UK and India (state of Tamil Nadu) in various industries including automotive, industrial goods, textile, and marine. For this purpose an interview framework based on key enablers identified from the literature, being information technology solutions, manufacturing equipment and human factors. This provided an assessment of the capability of the companies for being responsive to western demand.

Findings

The findings indicate that re-shoring to the UK is the result of inadequacy in responsiveness and long production lead times of the Indian suppliers. The outcome of this paper indicates that the top factors behind this inadequacy in responsiveness are logistics and transportation, electricity shortage, excessive paperwork and working attitude.

Originality/value

This paper aims to fill the gap in the re-shoring literature by providing a clear picture behind the reason for re-shoring in the UK and identify the drivers behind this shortcoming in the component supply from India.

The Amount of Control in Offshore Software Development Projects

Prior research has focused on factors influencing the choice of controls in traditional project settings. Building on this research, this paper investigates the amount of control—defined as the variety and intensity of control mechanisms—in offshore software development projects. Using a comparative case study approach, the authors put forward eight propositions regarding the factors that influence the amount of control and its dynamics. Their results not only confirm existing findings, such as the predominance of formal controls and the negative effect of trust on the amount of formal control, but also contribute with new findings. For instance, they were able to identify particularly high levels of control in projects with high task complexity and/or high offshore team involvement as well as intensive use of formal (outcome) control in high volume and strategically important projects. The authors’ empirical findings are integrated in a conceptual model that leads to a better understanding of the antecedents of the amount of both formal and informal controls. In contrast with previous studies, their findings do not support the notion that the amount of control is directly related to project success.