The outsourcing debate: Theories and Findings.

Publisher:
The Australian and New Zealand Academy of Management
Publication Type:
Journal Article
Citation:
Journal of the Australian and New Zealand Academy of Management, 2005, 11 (2), pp. 37 - 52
Issue Date:
2005-01
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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. This 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. A 10% net cost saving was considered necessary by an organization before embarking on an organizational 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 organizations 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.
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