Towards a framework for managing IT-enabled change, sourcing and governance

In the resource-based view, organisations are represented by the sum of their physical, human and organisational assets, resources and capabilities. Operational capabilities maintain the status quo and allow an organisation to execute their existing business. Dynamic capabilities, otherwise, allow an organisation to change this status quo including a change of the operational ones. Competitive advantage, in this context, is an effect of continuously developing and reconfiguring these firm-specific assets through dynamic capabilities. Deciding where and how to source the core operational capabilities is a key success factor. Furthermore, developing its dynamic capabilities allows an organisation to effectively manage change its operational capabilities. Many organisations are asserted to have a high dependency on - as well as a high benefit from - the use of information technology (IT), making it a crucial and overarching resource. Furthermore, the IT function is assigned the role as a change enabler and so IT sourcing affects the capability of managing business change. IT sourcing means that organisations need to decide how to source their IT capabilities. Outsourcing of parts of the IT function will also outsource some of the IT capabilities and therefore some of the business capabilities. As a result, IT sourcing has an impact on the organisation's capabilities and consequently on the business success. And finally, a turbulent and fast moving business environment challenges organisations to effectively and efficiently managing business change. Our research builds on the existing theory of dynamic and operational capabilities by considering the interdependencies between the dynamic capabilities of business change and IT sourcing. Further it examines the decision-making oversight of these areas as implemented through IT governance. We introduce a new conceptual framework derived from the existing theory and extended through an illustrative case study conducted in a German bank. Under a philosophical paradigm of constructivism, we collected data from eight semi-structured interviews and used additional sources of evidence in form of annual accounts, strategy papers and IT benchmark reports. We applied an Interpretative Phenomenological Analysis (IPA), which emerged the superordinate themes for our tentative capabilities framework. An understanding of these interdependencies enables scholars and professionals to improve business success through effectively managing business change and evaluating the impact of IT sourcing decisions on the organisation's operational and dynamic capabilities.

Knowledge process outsourcing in financial services: The vendor perspective

This research reports the findings from a study on nine knowledge process outsourcing (KPO) vendors working in the financial services industry. It delineates financial business processes along a low to high-end continuum. Findings suggest that KPO vendors are gradually moving along the value pathway offering more complex intellectual value activity based products and services to clients. However, they face many challenges including gaining the confidence of potential clients about outsourcing knowledge-intensive work, and finding effective solutions to mitigate outsourcing risk. Our paper concludes by developing a taxonomy of KPO scenarios to provide a backdrop for further academic research and to illustrate current practice.

HR attributions and the dual commitment of outsourced IT workers

Purpose – Outsourced information technology (IT) workers establish two different employment relationships: one with the outsourcing company that hires them and another with the client organization where they work daily. The attitudes that an employee has towards both organisations may be influenced by the interpretations or attributions that employees make about the reasons behind the human resource (HR) management practices implemented by the outsourcing company. This paper aims to propose that commitment‐focused HR attributions are positively and control‐focused HR attributions are negatively related to the affective commitment to the client organization, through the affective commitment to the outsourcing company. Design/methodology/approach – These hypotheses were tested with a sample of 158 highly skilled outsourced employees from the IT sector. Data were analyzed with structural equation modeling (SEM). Findings – The paper's hypotheses were supported. It can conclude that, if an employee interprets the HR practices as part of a commitment‐focused strategy of the outsourcing company, it has clear attitudinal benefits. The study found that the relationship between HR attributions and the commitment to the client organization is mediated by the commitment to the outsourcing company. Practical implications – These findings hint at the critical role of outsourcing companies in managing the careers of these highly marketable employees. Originality/value – This paper is the first to apply the concept of HR attributions to contingent employment literature in general and to outsourced IT workers in particular.

Outsourcing and downsizing: Processes of workplace change in public health

Throughout the 1990s, public hospitals embarked on a range of benchmarking exercises for support services, often accompanied by downsizing and, in some cases, outsourcing. These support services included clinical areas such as, radiology, pharmacy and pathology, and nonclinical areas of catering and cleaning, engineering and environmental services. The impetus for this trend was the introduction of the Federal Governments National Competition Policy with its rationale that private sector pressures and competition would make the public sector more efficient.
Through a case study approach, this paper discusses this process at two public hospitals, the aim being to investigate the reasons for outsourcing, outsourcings interconnectedness with downsizing, and the implications at the workforce level. Workplace issues discussed include consultation between management, unions and employees, changes to employee numbers and work practices, maintenance of workplace conditions, implications for staff recruitment and retention, and the relative power of management and unions. It concludes that benchmarking, outsourcing and downsizing have all been used to bring about workplace change. Whilst the choice between processes may be dependent on management perception of the workplace environment, implications for the workplace from each process have been similar.

An IT Bachelor degree using modern technologies to illustrate core concepts and principles and building generic skills

Information Technology (IT) changes very quickly and influences business, industry and the public in an enormous manner. Outsourcing of IT jobs to cheaper overseas labor and globalization of IT companies become a common practice. Graduates of IT university courses must be well prepared to address the needs and expectations of business, industry and every day life. Many factors in an Information Technology curriculum influence graduates’ professional preparation and image. The most important of them is to reflect technology change, the current state of knowledge of computing, business and industry demands and students’ expectations. The aim of our project was to develop a new Bachelor of IT curriculum that satisfies these requirements. In this report we concentrate our attention on two critical aspects of IT curriculum content, the modern technologies to be used to illustrate basic concepts and principles of computing, and the generic skills that each graduate is expected to acquire to get a job in Australia.

Reconceptualising outsourcing in the public sector : choices and outcomes

National Competition Policy’s introduction encouraged the use of outsourcing in the public sector, but variations in the extent and types of services outsourced were evident. Through reviewing the economic and political literature, this paper has uncovered six reasons for outsourcing that straddle the two paradigms. The desire to reduce costs and increase efficiency, focus on core competitive advantage, introduce workforce flexibility, manage industrial relations’ problems, satisfy decision-makers’ personal objectives and adhere to the neo-liberal government agenda are discussed. The paper puts forward a number of models which delve into the relationship between the theoretical factors which economic and political theorists have proposed as being important in making the decision to outsource and delineates between those factors which are perceived by decision-makers as important in their reasoning and those which are unperceived but impact on the outcomes. It concludes that is only by understanding the complex relationship between reasons, and perceived and unperceived factors, will outcomes be able to be predicted.

A conceptual model for security outsourcing

This research analyses the current literature on IT security outsourcing and the organisational attitudes towards this approach to determine the applicability of outsourcing IT security in a commercial environment. A conceptual model is developed as the main goal of research which provides guidance in the process of outsourcing IT security functions to a third-party security service provider. The research conducted has established a complete process for outsourcing IT security.

Understanding informations systems outsourcing success and risks through the lens of cognitive biases

Because outsourcing of information systems (IS) is now widespread, it is generally assumed to be successful. It is also often assumed that outsourcing risks are easily managed. In this paper we adopt an “evidence based management” approach to first test these assumptions through a qualitative metaanalysis of academic studies into IS outsourcing outcomes. Our research reveals a shortage of reliable and valid evidence for outsourcing’s benefits, and for the level of risk involved. We then use data from a series of focus groups to explain the paradox of widespread adoption of a strategy with limited empirical support. These focus groups were interpreted through the lens of research on a
range of cognitive mechanisms and biases that are known to affect decision makers. We conclude that cognitive mechanisms that are likely to affect sourcing decisions include framing biases, cognitive dissonance, attribution error, and the “optimism”, “confirmation”, “disconfirmation” and “overconfidence” biases. Given the shortage of supporting evidence, and the potential for these biases to operate, we argue that researchers need to be more critical in their analysis of reports of the success and risks of IS outsourcing.

Outsourcing in the Australian health sector : the interplay of economics and politics

Purpose – The paper discusses the reasons and approaches used at three health organisations in introducing outsourcing. It specifically answers the question: why have managers of health organisations outsourced some functions in preference to others?

Design/methodology/approach – This research employs a case study method making use of qualitative analysis. The health organisations were chosen first as representatives of their type, and secondly due to the nature of the outsourcing decisions made. The first health organisation operates in the rural sector; the second is a metropolitan network; and the third is a large metropolitan hospital, which, in contrast to the other two case study organisations, had made only one decision to outsource, producing the largest outsourcing contract in health in Australia. Furthermore, this situation was distinctive as the contract was terminated and re-issued to another private sector organisation.

Findings – The reasons for outsourcing varied within and between health organisations. Although generally they were made on the bases of the characteristics of the labour market, employee skill levels and the nature of industrial relations, the perception of what was core, the level of internal management skills, the ability of internal teams to implement change and the relationship between management and staff. Even though cost savings and a downsized labour force resulted, generally these occurred even when services were not outsourced, through the use of other change processes, such as introducing new technology, changing structures and promoting workforce flexibility. The interplay of political reasons and economic effects was evident along with the political nature of the decision-making and processes used. The paper concludes that the power of managers was a moderating factor between the desire for outsourcing and whether outsourcing actually occurred.

Research limitations/implications – Although this research was conducted solely within the health sector it has implications for other public sector bodies and the private sector.

Practical implications – Managerial decision making can be enhanced with the exploration of the full complement of reasons for the outsourcing decision.

Originality/value – The paper has value to both academics researching in the public sector and public sector managers.

Outsourcing of core business functions : focus on the accounting profession

This study found that a majority of Australian accounting firms either currently oursource accounting services or are considering outsourcing, and identified the significance of outsourcing contracts. It established that most firms outsource their core services. The study provided important information regarding ethical issues and the relinquishment of professional status.

The transnational corporation, corporate social responsibility and the 'outsourcing' debate

Current popular debates in the United States and Australia on the topics of 'jobless recoveries' and the 'outsourcing' of skilled IT jobs to India (most conspicuously) evidence a confusion as to the institutional role of the business firm and its obligations to the broader stakeholder community, as well as to the more specific differences between outsourcing and the spatial restructuring of corporate value-chains. This paper will take up several issues in the hope of clarifying this confusion, including the essential nature of the business firm as an economic, political and social institution; the possibilities for social responsibility and stakeholder management in large internationalised firms; and the critical distinctions between domestic and international outsourcing and spatial restructuring. Data from the 'outsourcing' debate will be referenced to illustrate the differing logics/rationalities of relevant stakeholder groups.

Outsourcing the risks : alcohol licensing, risk and the making of the night time economy

Mariana Valverde argues that in the late twentieth century, the British state contracted out the prevention of disorder and monitoring of risks produced by widespread alcohol use to the private sector through the process of liquor licensing. This paper will argue that this scenario was duplicated in Victoria at the same time. It will do so by an analysis of four government-instigated inquiries into liquor licensing regimes from 1965 to 1998. The inquiries were distinguished by the subtly different emphases in their terms of reference. In 1965, the Phillips Royal Commission was directed to inquire into the best ways of dealing with the problems alcohol produced and how best to regulate it for the benefit of the population as a whole. By the time the Nieuwenhuysen Report was commissioned in 1985, the emphasis had changed, and he was directed to inquire how best to serve the interests of alcohol consumers and to produce the licensing regulatory regime which would enable the construction of a 24-hour city. Any anomalies that still existed in the revised Act were eliminated in the 1998 review which was instigated as a direct response to the National Competition Policy. A consequence of these changes over 30 years was the development of particular risk groups, such as ‘binge-drinking young people’, whose violence and nuisance must be controlled to enable all other ‘reasonable’ and ‘moderate’ drinkers be allowed to keep drinking. Thus the notion of risk had been redefined and the responsibility for dealing with these risks had been directed from the state to individual licensees and individual drinkers.

Identifying the extent, motivations and barriers to outsourcing of accounting services

In this paper we analyse the oursourcing of accounting services. The extent to which firms are currently outsourcing, or considering outsourcing such services, and the motivations and barriers associated with outsourcing are identified. Empirical data from a random sample of accounting firms are used in this analysis. Data indicate that the majority of accounting firms are either currently outsourcing or considering outsourcing and that they exopect the volume of oursourced services to increase. In contrast to the scholarly literature advocating labor arbitrage as the primary driver for organizations choosing to outsource, in this study it was found that the main factors underpinning the decision to outsource were the expediting of service delivary to clients, and to enable the firm to focus on its core competencies.

Consideration of selflessness and self-interest in outsourcing decisions

Purpose – The paper aims to discuss the need to balance selflessness and self-interest issues in outsourcing decisions. This discussion is timely given the tensions that currently exist between those who want off-shore outsourcing to continue as a means for increasing international trade, and those who only want to conduct business on-shore.

Design/methodology/approach – A conceptual approach has been taken in this paper in order to highlight key considerations for ethical decision-making with respect to off-shore outsourcing.

Findings – Considerations of selflessness and self-interest are embedded in outsourcing decisions. It is recommended that a balance between making profits and fulfilling social responsibilities is required, ideally, at each stage of decision-making. Hence, managers should think critically about the reasons behind off-shore outsourcing decisions, the process of arriving at decisions, and the impact of their decisions on stakeholders.

Research limitations/implications – This is a conceptual paper and further empirical data to validate the stages of decision-making framework are required.

Practical implications – Failure to take into account the selflessness and self-interest outcomes of off-shore outsourcing could potentially off-set strategic gains by leading to negative media publicity for a company.

Social implications – Ethical considerations as part of outsourcing decisions should result in a transparent, fair and more humane working environment for both the host and the home country representatives involved in the process.

Originality/value – This paper presents an original framework of selflessness and self-interest considerations when making off-shore outsourcing decisions. Both Eastern and Western business perspectives have been incorporated as part of the decision-making framework.

Offshoring of IT services : survey of literature and research agenda

Although international outsourcing or offshoring of information technology services by advanced industrialised countries from less developed countries is a relatively new phenomenon, a plethora of research exists on the subject. And, given the multidisciplinary nature of the subject, the literature on offshoring is often disparate and subject to confusion. This paper surveys the developments in the empirical literature on offshoring over the 1992-2007 period and identifies potential areas for future research. The main findings are that while the intensity of research on the subject has increased rapidly over a short period of time, research efforts to date have focussed mostly on offshoring decision and offshoring management particularly from the perspective of the offshorer. Future research opportunities exist in the area of offshoring strategy and performance relationship, the behaviour and performance of offshore service providers particularly within the context of firms from less developed countries competing globally, and the nature of competition among offshore service providers both within and among countries.