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Strategic manoeuvers in outsourcing arrangements

Strategic manoeuvers in outsourcing arrangements PurposeAdaptation is often seen as a key competitive advantage for outsourcing vendors. Outsourcing research has often assumed that vendor capabilities are static. However, as a result of uncertainties and/or changes in the client environment, vendors need to be able to adapt their outsourcing capabilities. The aim of our research is to compare two contrasting outsourcing approaches and illustrate how an adaptive approach may deliver better results for clients in the long term.Design/methodology/approachThe paper uses a combination of literature and case study research. A retrospective case study approach was adopted, using interviews, observations and analysis of reports. Two case studies utilizing contrasting clients approaches were investigated and compared. In one of the case studies, the client reorganized activities first and then outsourced them, while in the other, the client did the reverse – outsourced first and then reorganized.FindingsThe findings indicate that reorganizing first and outsourcing afterwards contributes to a more controlled implementation, which results in a more defined and stable set of vendor outsourcing capabilities that contributed to short-term success. In contrast, outsourcing first and reorganizing later demonstrates a less controlled redesign of the client’s organizational structure, which requires a malleable set of outsourcing capabilities to accommodate future change. The latter strategic manoeuver results in an extended adaptation period, as some capabilities need to be developed over time. However, it may improve success over time as subsequent changes in the client environment can be catered for in a better way.Research limitations/implicationsOnly two explorative case studies were performed, limiting confidence in the degree of generalization of the results. We plea for more research on the effect of context dependency as various contingencies may impact the adaptation of outsourcing capabilities; for example, the volatility of the client’s market or the stability of the technology concerned.Practical implicationsWhen a client applies a proactive manoeuver, reorganizing first and then applying outsourcing, the number of adaptive capabilities required of the outsourcing vendor is reduced, limiting the risk for the client in the short term. In the longer term, however, subsequent change requirements may be less well-accommodated.Originality/valueStrategic manoeuvers within an outsourcing context have received limited attention in research. As far as we know, this is the first empirical research that investigates the benefits of vendors having adaptive capability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Outsourcing: An International Journal Emerald Publishing

Strategic manoeuvers in outsourcing arrangements

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1753-8297
DOI
10.1108/SO-12-2015-0031
Publisher site
See Article on Publisher Site

Abstract

PurposeAdaptation is often seen as a key competitive advantage for outsourcing vendors. Outsourcing research has often assumed that vendor capabilities are static. However, as a result of uncertainties and/or changes in the client environment, vendors need to be able to adapt their outsourcing capabilities. The aim of our research is to compare two contrasting outsourcing approaches and illustrate how an adaptive approach may deliver better results for clients in the long term.Design/methodology/approachThe paper uses a combination of literature and case study research. A retrospective case study approach was adopted, using interviews, observations and analysis of reports. Two case studies utilizing contrasting clients approaches were investigated and compared. In one of the case studies, the client reorganized activities first and then outsourced them, while in the other, the client did the reverse – outsourced first and then reorganized.FindingsThe findings indicate that reorganizing first and outsourcing afterwards contributes to a more controlled implementation, which results in a more defined and stable set of vendor outsourcing capabilities that contributed to short-term success. In contrast, outsourcing first and reorganizing later demonstrates a less controlled redesign of the client’s organizational structure, which requires a malleable set of outsourcing capabilities to accommodate future change. The latter strategic manoeuver results in an extended adaptation period, as some capabilities need to be developed over time. However, it may improve success over time as subsequent changes in the client environment can be catered for in a better way.Research limitations/implicationsOnly two explorative case studies were performed, limiting confidence in the degree of generalization of the results. We plea for more research on the effect of context dependency as various contingencies may impact the adaptation of outsourcing capabilities; for example, the volatility of the client’s market or the stability of the technology concerned.Practical implicationsWhen a client applies a proactive manoeuver, reorganizing first and then applying outsourcing, the number of adaptive capabilities required of the outsourcing vendor is reduced, limiting the risk for the client in the short term. In the longer term, however, subsequent change requirements may be less well-accommodated.Originality/valueStrategic manoeuvers within an outsourcing context have received limited attention in research. As far as we know, this is the first empirical research that investigates the benefits of vendors having adaptive capability.

Journal

Strategic Outsourcing: An International JournalEmerald Publishing

Published: Jun 20, 2016

References