Outsourcing: Towards the ‘Shamrock Organization’

Handy C. , The Elephant and the Flea: New Thinking for a New World, Arrow: London, 2001.

Note the ‘flea' does not necessarily have to be a smaller organization. In fact, many of the main ICT outsourcing vendors are themselves large ‘elephants’, but the elephant-flea analogy serves to convey the notion that firms interact with one another in this way. Throughout this paper, reference is made to the outsourcing organization (the outsourcer) and the outsourcing vendor (the external service provider). While outsourcing can range from the full-service (using a single vendor) to the selective type (using multiple vendors to provide point services such as applications, network and PC services), for convenience, this paper adopts the model of full-service outsourcing in its discussion of outsourcing practices. For a discussion on the distinction between these forms of outsourcing see Scardino, L., ‘Choosing Between Full-Service and Selective Outsourcing’, Research Note, Gartner Research, Case Studies CS-17-9357, 2002.

Handy C. , 2001, op. cit.

‘Processes' are included in this definition on the basis that some processes, although being inherently intangible like services, can create value.

The Outsourcing Institute and Dun and Bradstreet, 2000, The 2000 Outsourcing Index, available at www.outsourcing.com

The Outsourcing Institute and Dun and Bradstreet, 2000, The 2000 Outsourcing Index, available at www.outsourcing.com

While the number of organizations outsourcing activities is increasing, the majority of outsourcing growth is attributed mainly to current outsourcers increasing the extent of this activity.

Deavers K.L. , ‘Outsourcing: A Corporate Competitiveness Strategy, Not a Search for Low Wages’, Journal of Labour Research, Vol. 18, No. 4, 1997, pp. 503–519; DiRomualdo, A. and Gurbaxani, V., ‘Strategic Intent for IT Outsourcing’, Sloan Management Review, Vol. 38, No. 4, 1998, pp. 67–80; interview with Maurice Greaver hosted by Frank Casale available at www.outsourcing.com; Verizon, The IT Outsourcing Dilemma: Considerations in the Evaluation of IT as a Business Strategy, 2002, available at www.verizonIT.com; Kelley, B., ‘Outsourcing Marches On’, Journal of Business Strategy, Vol. 16, No. 4, 1995, pp. 51–64; Newman, K., ‘Organizational Transformation during Institutional Upheaval’, Academy of Management Review, Vol. 25, No. 3, 2000, pp. 602–619.

Cunha R.C. , ‘Privatisation and Outsourcing’, in Cooper C.L. , and Burke R.J. (Eds.), The New World of Work, pp. 29–46, Blackwell: Oxford, 2002; Earl, M.J., ‘The Risks of Outsourcing IT’, Sloan Management Review, Vol. 37, No. 3, 1996, pp. 26-32.

Cunha R.C. , 2002, Earl M.J. , ‘The Risks of Outsourcing IT’, Sloan Management Review, Vol. 37, No. 3, 1996, pp. 26-32.

Interview with Maurice Greaver hosted by Frank Casale available at www.outsourcing.com

Quinn J.B. ‘Strategic Outsourcing: Leveraging Knowledge Capabilities’, Sloan Management Review, Vol. 40, No: 2, 1999.

See Prahalad C.K. , and Hamel G. , ‘The Core Competence of the Corporation’, Harvard Business Review, Vol. 69, May/June, 1990, pp. 79–91.

Quotation taken from Art Williams, Giga Information Group. Reported in Mid-sized Companies Discover Outsourcing: It's Not Just for the Big Guy's Anymore.,, The Outsourcing Institute: New York, NY.

Womack J.P. , and Jones D.T. , Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Simon and Schuster: New York, NY., 1996.

Mazzawi E. , ‘Transformational Outsourcing’, Business Strategy Review, Vol. 13, No. 3, 2002.

Giera J. , ‘How to Determine When Outsourcing is the Only Alternative’, Ideabyte, Giga Information Group Inc., RIB 062002-00105, 2002.

Giera L , ‘Live from GigaWorld: Vendor Management for Outsourcing and IT Services—The Role of the Chief Sourcing Officer’, Planning Assumption, Giga Information Group Inc., RPA 052002-00016, 2002.

The Outsourcing Institute and Dun and Bradstreet, 2000, op. cit.

The term, outsourcing ‘contract’ implies that the agreement is arm's-length and transactional in nature. This, unfortunately, has implications for the management of the on-going relationship between the organization and outsourcing vendor. Outsourcing, it is argued here, should be viewed as ongoing and dynamic, where flexibility should be an inherent part of the process, not merely a desirable consequence of it.

The Outsourcing Institute, Survey of Current and Potential Outsourcing End-Users, The Outsourcing Institute: New York, NY., 1998.

Boyd W. , ‘Creating Win-Win Outsourcing Relationships’, The Outsourcing Institute: New York, NY., 2002.

Pearce J. , ‘Towards an Organizational Behaviour of Contract Labourers: Their Psychological Involvement and Effects on Employee Co-Workers’, Academy of Management Journal, Vol. 36, No. 5, 1993, pp. 1082–1096.

Hutchin N.L. , ‘Measurement in Systems: A Qualitative View (or Flow to Handle the Soft Stuff?)’, The Outsourcing Institute: New York, NY., 2002.

These criteria do not consider the financial, legal or other properties of due diligence that should be adhered to in this process. Rather, these criteria serve merely to encapsulate the ‘Softer’ aspects of the vendor screening which, other things being equal, may contribute more value to the outsourcing contract.

Venkatraman N. , ‘Beyond Outsourcing: Managing IT Resources as a Value Centre’, Sloan Management Review, Vol. 38, No. 3, 1997, pp. 51–64.