The business environment is changing due to influence from external factors such as changes in customers’ preferences. The changes have led to increased pressures on businesses to improve their performance and gain competitive advantage. Firms are currently under increased pressure to continually review their operations with the aim of addressing threats emanating from changes in the external environment and harnessing the opportunities (Mani, Barua, & Whinston, 2010).
Innovation, creativity and creation of synergies in operations are highly emphasized as businesses try to improve their positioning in the market (Mani, Barua, & Whinston, 2010). In this complex operational environment, outsourcing IT processes has come up as one of the avenues that businesses can use to improve their operations. Information processes within a functional firm define the levels of organization and coordination that can be attained. Poorly coordinated information processes affect interaction between different entities that are responsible for value generation in an organization (Guy, & Hill, 2007).
Outsourcing such processes to professional companies that have adequate professional knowledge and experience may improve overall operational efficiency (Guy, & Hill, 2007). However, such improvements depend on the levels of professionalism displayed by the third party entity. This clearly emphasizes the need to spend considerable expertise, finances and time in choosing an entity that a business will outsource its IT processes to (Mani, Barua, & Whinston, 2010). Choosing the processes that will be outsourced is equally important.
Outsourcing like any strategic endeavor is associated with some risks that may have to be evaluated in determining the specific processes that can be outsourced (Guy, & Hill, 2007). The reputation and brand equity of a firm may be affected negatively if it outsources its information processes to an unscrupulous third party. However, there is minimal literature on risk assessment when making decisions on the processes that can be outsourced and the entity that should be outsourced to. Outsourcing as a strategic direction should be a result of an objective decision making process.
In making strategic choices, businesses have to consider different viewpoints from both major and minor stakeholders (Serrato, Ryan, & Gaytan, 2007). Analysis of the external and internal environment may also come in handy in determining the suitability of outsourcing as a strategic direction. An analysis of the internal environment may involve an audit of internal capability to support outsourcing (Kumar, Aquino, & Anderson, 2007). This helps ensure that firms choose to outsource their information processes only when they are sure they can provide the required support structures and expertise.
However, these multiple requirements may reduce the potential gains from outsourcing and tend to be assumed by businesses (Kumar, Aquino, & Anderson, 2007). Inclusion of employees as an example may result in increased allocation of time and financial resources to the project. This may balloon the overall cost of outsourcing and delay or impede the realization of the benefits associated with this strategic direction. Evidently, making decisions relating to outsourcing is a complex process that requires further research to determine the moderating variables and the best practices.
Research Aim and Objectives The aim of the study is to determine the variables that businesses consider when making the decision to outsource. Additionally, the study seeks to determine if risk assessment, change management and inclusion of different stakeholders are awarded as much weight as they require when making the decision to outsource. To attain these aims, the following objectives will be addressed: a. To determine the main variables that businesses consider when making the decision to outsource their information processes b.
To determine if risk assessment is significantly influential on the decision making process when seeking to outsource information processes c. To determine if change management requirements significantly influence decision making when deciding to outsource information processes. d. To determine whether different stakeholders in businesses are adequately represented when making decisions on the processes to outsource and the third party entity to outsource to. Research Questions The following research questions will guide address of the research objectives:
a. What are the main variables that businesses consider when making the decision to outsource their information processes? b. Is risk assessment significantly influential on the decision making process when seeking to outsource information processes? c. Are change management requirements significantly influential on the decision making process when seeking to outsource information processes? d. Do businesses include different entities when making decisions on the processes to outsource and the third party entity to outsource to?
Rationale Objectivity when making decisions that affect business operations is essential. Few studies that have sought to establish the variables that businesses consider when making decisions to outsource in practice. Other strategic factors such as change management, inclusion of different business entities and risk assessment are also characterized by inadequate coverage. To ensure objectivity these requirements have to be encapsulated into decision making which is only possible if their importance is fully appreciated.
This is the main motivation to the study which also seeks to fill the existing gaps in knowledge on making decisions on outsourcing information processes. Significance of the Research The research will lead to development of knowledge on the practical factors that businesses consider when making decisions to outsource business processes. Additionally, the study will present an audit of risk assessment, inclusion of varied stakeholders and change management requirements in practice when making decisions to outsource business information processes.
This knowledge is important in providing pointers on areas that businesses need to improve on in practice. Additionally, this knowledge may promote research that will seek to establish any operational or internal factors that influence the decision making process. Clearly, the study is significantly influential on practical decision making for businesses seeking to outsource and also provide a platform for additional research on business outsourcing and decision making. References Guy, R. A. , & Hill, J. R. (2007). 10 outsourcing myths that raise your risk. Healthcare Financial Management, 61(6), 67-72
Kumar, S. , Aquino, E. C. , & Anderson, E. (2007). Application of a process methodology and a strategic decision model for business process outsourcing. Information Knowledge Systems Management, 6(4), 323-342 Mani, D. , Barua, A. , & Whinston, A. (2010). An Empirical Analysis of the Impact of Information Capabilities Design on Business Process Outsourcing Performance. MIS Quarterly, 34(1), 39-62 Serrato, M. A. , Ryan, S. M. , & Gaytan, J. (2007). A Markov decision model to evaluate outsourcing in reverse logistics. International Journal of Production Research, 45(18/19), 4289-4315
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