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Factors influencing the outsourcing decisions: a study of the banking sector in India

Factors influencing the outsourcing decisions: a study of the banking sector in India Purpose – This paper is an empirical study of outsourcing practices in the banking sector in India. The purpose of the paper is to investigate the impact of factors which influence the decision makers' attitude towards outsourcing. Design/methodology/approach – Based on a review of the existing literature, an attitudinal model of outsourcing was developed. This model was used to: identify the key factors of benefits, risks, roadblocks, and criticality of outsourcing; develop the instrument to measure the factors; and formulate hypotheses concerning the impact of these factors. The constructs in the instrument that measured these factors were validated by factor analysis. Findings – The impacts of perceived benefits, perceived roadblocks, and perceived criticality on the attitudes towards outsourcing were found to be strong and statistically significant. The impact of perceived risk was weak and statistically insignificant. The model explaining the combined impact of these four factors on outsourcing attitudes was also statistically significant. Research limitations/implications – An important insight from this study is that the clients, at least in the banking sector in India, tend to value in outsourcing quality factors such as process improvement, services improvement and cost transparency more than cost savings. The results of the study provide a basis for rethinking the value proposition offered by outsourcing vendors and for refocusing the research on outsourcing of services in particular. Originality/value – While most studies on outsourcing tend to be theoretical and/or focus on outsourcing from developed to developing countries, this is an empirical study focusing on outsourcing by organizations based in developing countries such as India. Therefore, the results are not confounded by differences in culture‐specific communications, business practices, and regulatory regimes between the countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Outsourcing: An International Journal Emerald Publishing

Factors influencing the outsourcing decisions: a study of the banking sector in India

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1753-8297
DOI
10.1108/17538291111185485
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper is an empirical study of outsourcing practices in the banking sector in India. The purpose of the paper is to investigate the impact of factors which influence the decision makers' attitude towards outsourcing. Design/methodology/approach – Based on a review of the existing literature, an attitudinal model of outsourcing was developed. This model was used to: identify the key factors of benefits, risks, roadblocks, and criticality of outsourcing; develop the instrument to measure the factors; and formulate hypotheses concerning the impact of these factors. The constructs in the instrument that measured these factors were validated by factor analysis. Findings – The impacts of perceived benefits, perceived roadblocks, and perceived criticality on the attitudes towards outsourcing were found to be strong and statistically significant. The impact of perceived risk was weak and statistically insignificant. The model explaining the combined impact of these four factors on outsourcing attitudes was also statistically significant. Research limitations/implications – An important insight from this study is that the clients, at least in the banking sector in India, tend to value in outsourcing quality factors such as process improvement, services improvement and cost transparency more than cost savings. The results of the study provide a basis for rethinking the value proposition offered by outsourcing vendors and for refocusing the research on outsourcing of services in particular. Originality/value – While most studies on outsourcing tend to be theoretical and/or focus on outsourcing from developed to developing countries, this is an empirical study focusing on outsourcing by organizations based in developing countries such as India. Therefore, the results are not confounded by differences in culture‐specific communications, business practices, and regulatory regimes between the countries.

Journal

Strategic Outsourcing: An International JournalEmerald Publishing

Published: Nov 22, 2011

Keywords: India; Banks; Outsourcing; IS outsourcing; Business process outsourcing; Outsourcing strategy

References