A study of out‐sourcing versus in‐sourcing tasks within a project value chain

Abstract

Purpose -The purpose of this paper is to investigate a case of in-sourcing a key resource verses using the standard mode of operation of utilizing an established out-sourcing firm. The studied organisation is a large telecommunication firm in North America. The aim of the paper is to illustrate how a new approach to the organisational procurement decision making process to facilitate competitive advantage was influenced by simplicity rather than simple cost reduction. Design/methodology/approach -Single illustrative case study testing the usefulness of the composite out-sourcing decision framework decision making framework together with a clear focus on total value adding elements of service delivery. Findings -The analysis that in-sourcing critical tasks or processes are advantageous to the case study organization as well as to the smaller internal department that it directly impacts. Research limitations/implications -When undertaking business projects or programs of projects, there are many cases where business processes may be outsourced or sub-contracted. While out-sourcing does, and will in the future, play a large role in cost reduction and giving the buying firm the ability to focus on core competencies, there is still the niche market to in-source critical tasks and retain critical resources. Decisions need to be based on value contribution rather than simple cost reduction. Originality/value -This paper's value has been to illustrate some frameworks, tools and techniques used to explain how a particular insourcing/outsourcing decision was undertaken in a business project context and it explains the rationale behind decisions being made.

Review of the Empirical Business Services Sourcing Literature: An Update and Future Directions

“…33. Client-Specific Knowledge Required: The degree to which a unit of work requires a significant amount of understanding/knowledge about unique client systems, processes, or procedures (e.g., McKenna and Walker, 2008). 34.…”

“…52. Convenience: A client organization's desire to select a sourcing option based on ease of use, convenience, and less frustration (e.g., McKenna and Walker, 2008). 53.…”

Uncovering the nature of the relationship between outsourcing motivations and the degree of outsourcing: An empirical study on Finnish small and medium-sized enterprises

“…Ease of use refers to the outsourcer’s desire to simplify the interaction with a business process and/or its output through, for example, improved customer support or enhanced software. Improving the ease of use of a business process through outsourcing may also decrease the level of frustration associated with that specific business process (Lacity et al, 2016; McKenna & Walker, 2008). It is assumed that, in order to stay competitive, BPO providers are incentivized to focus on delivering superior customer service to their clients.…”

The International Public Procurement Evolution: New Strategic Challenges Met in Collaboration with Internal Audit Advisory Services

“…"Insourcing" critical tasks and resources may not be the proper decision in terms of efficiency, but it usually reduces the exposure of the organization to external risks and threats. Procurement decisions, therefore, should be taken based not only on the need for cost reductions but also towards mid-term value contribution as well as long-term business continuity and strategic objectives achievement (McKenna et al 2008).…”