Outsourcing - A Path without Return?

Diploma Thesis , 2006 , 129 Pages , Grade: 1

Business economics - Business Management, Corporate Governance

Outsourcing is a complex process. It is a top management issue and a strategic task to maintain competitiveness and sustainable competitive advantage in a corporation. As a main outcome of this thesis the authors developed and created a strategic framework, guided by the aim to increase the quality and efficiency in outsourcing decision processes. It should provide a supportive tool for successful outsourcing decisions in a fast changing environment. Furthermore the authors answer the question whether outsourcing is a path without return or not. The basis for the outcome and the method the authors chose to achieve their findings and concluding framework are:
At first: an analysis of the relevant academic publications and a comparison of the main findings with popular scientific literature. Covered topics are outsourcing as a strategic tool for competitiveness, core competence concentration, offshoring versus outsourcing, service outsourcing and ethics in outsourcing. This was followed by an analysis of long term impacts to national economies caused by outsourcing and offshoring activities. Further qualitative interviews with two Austrian Enterprises and expertise knowledge from the worlds top consulting firms, flow into the development of the strategic framework.
The new framework created by the authors of the thesis is inspired by the “stagegate-model” of Robert G. Cooper and an advancement of it. This model is originally used in innovation management for the evaluation of new developments and innovations.

Inhaltsverzeichnis (Table of Contents)

• Content overview
• Chapter 1: Outsourcing as a strategic tool of competitiveness (Ritt, Spatzenegger)
• 1.1. The advent of outsourcing in strategic functions.
• 1.2. Thinking in competencies.
• 1.3. Sources of competitive advantage.
• 1.4. How to identify core competences
• 1.5. Core competences and strategic outsourcing.
• 1.6. Suitable outsourcing activities
• 1.7. Strategic outsourcing and transaction costs.
• 1.8. Other forms of cooperation
• 1.9.1. Sources of competitive advantage: for example strategic marketing programs.
• 1.9.2. Sources of competitive advantage: for example temporary employment.
• Chapter 2: Outsourcing versus offshoring (Ritt, Spatzenegger)
• 2.1. Domestic outsourcing.
• 2.2. Offshore outsourcing.
• 2.3. Offshoring and other forms of international cooperation
• 2.4. Service outsourcing.
• 2.5. When is outsourcing beneficial for companies?
• 2.6. When is outsourcing beneficial for the workforce?
• Chapter 3: Outsourcing in practice: qualitative interviews (Ritt, Spatzenegger)
• 3.1. The outsourcing experiences of EMCO Maier GMBH.
• 3.2. Offshoring and outsourcing practised by Palfinger AG.
• 3.3. Major learnings from outsourcing activities
• 3.4. Ethics and outsourcing
• Chapter 4: Impacts of outsourcing on the national economy (Ritt, Spatzenegger)
• 4.1. The impacts of outsourcing and offshoring to the national economy exemplified with Austria, Germany and other European countries:.
• 4.2. The "bazaar economy" phenomenon:
• 4.3.1. When German and Austrian companies offshore or outsource to Eastern European countries….
• 4.3.2. Impacts of manufacturing outsourcing for the Republic of Ireland.
• 4.4. Outsourcing and specialisation
• 4.5. Effects on wages.
• 4.6. Increasing exports
• 4.7.1. Human capital and outsourcing.
• 4.7.2. Factor price convergence and labour wages
• 4.8. What betters the position of Germans workforce?
• 4.9.1. Critics on Sinns “bazaar economy" thesis
• 4.9.2. The German nation in the future and globalisation
• Chapter 5: Consultants on outsourcing (Ritt, Spatzenegger)
• 5.1. Publications underline the complexity of strategic outsourcing
• 5.2. Advantages and goals when outsourcing.
• 5.3. Cap Gemini Ernst & Young talks about “transformational outsourcing” as the latest trend.
• 5.4. Roland Berger predicts the situation in Austria 2015.
• 5.5. Conclusion "consultants on outsourcing"
• Chapter 6: Strategic frameworks for outsourcing decisions (Ritt, Spatzenegger)
• 6.1. Outsourcing and strategic change management.
• 6.2. Evaluation of strategic frameworks for outsourcing decisions
• Chapter 7: Resumee (Ritt, Spatzenegger).
• 7.1. The original “stage-gate model” created by Robert Cooper.
• 7.2. The new strategic framework.
• 7.3. Is outsourcing a path without the choice to return?

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis explores the strategic implications of outsourcing, examining its role as a tool for competitiveness, its various forms and applications, and its impact on national economies. The work aims to provide a comprehensive understanding of the phenomenon, including both its potential benefits and challenges.

• Outsourcing as a strategic tool for competitiveness
• The relationship between outsourcing and offshoring
• The impact of outsourcing on national economies
• The role of consultants in outsourcing decisions
• Strategic frameworks for effective outsourcing

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: This chapter establishes the concept of outsourcing as a strategic tool for enhancing competitiveness. It explores the evolution of outsourcing in strategic functions, the importance of thinking in competencies, and the identification of core competences. The chapter further examines the link between core competences and strategic outsourcing, highlighting suitable outsourcing activities and the role of transaction costs in outsourcing decisions. It also discusses alternative forms of cooperation, including strategic marketing programs and temporary employment.
• Chapter 2: This chapter differentiates between domestic and offshore outsourcing, analyzing their respective advantages and disadvantages. It examines offshoring in the context of other international cooperation models, and delves into the specific characteristics of service outsourcing. The chapter concludes by outlining the conditions under which outsourcing proves beneficial for both companies and the workforce.
• Chapter 3: This chapter presents real-world case studies of outsourcing practices, focusing on the experiences of EMCO Maier GMBH and Palfinger AG. Through qualitative interviews, it highlights the key advantages and challenges associated with outsourcing, shedding light on the lessons learned from these experiences. The chapter also addresses ethical considerations related to outsourcing practices.
• Chapter 4: This chapter examines the impacts of outsourcing and offshoring on national economies, using Austria, Germany, and other European countries as examples. It explores the "bazaar economy" phenomenon, analyzing the consequences of offshoring and outsourcing to Eastern European countries and the specific impact on the Republic of Ireland. The chapter further delves into the effects of outsourcing on specialization, wages, exports, human capital, and factor price convergence, concluding with a discussion of critical perspectives on the "bazaar economy" thesis and the implications for the future of the German nation in a globalized world.
• Chapter 5: This chapter focuses on the perspectives of consultants on outsourcing, analyzing their publications and recommendations. It examines the advantages and goals of outsourcing, highlighting the emerging trend of "transformational outsourcing" as presented by Cap Gemini Ernst & Young. The chapter concludes with predictions from Roland Berger concerning the situation in Austria in 2015.
• Chapter 6: This chapter delves into strategic frameworks for making outsourcing decisions, discussing the role of outsourcing in strategic change management. It provides a comprehensive evaluation of existing frameworks, aiming to identify the most effective approaches for successful outsourcing.

Schlüsselwörter (Keywords)

This thesis focuses on the strategic implications of outsourcing, exploring its role as a tool for competitiveness, its various forms, its impact on national economies, and the importance of effective strategic frameworks for making outsourcing decisions. Key themes include core competences, transaction costs, domestic and offshore outsourcing, service outsourcing, ethical considerations, the "bazaar economy" phenomenon, human capital, factor price convergence, and transformational outsourcing.

• College: University of Innsbruck (Institut für Leadership, strategische Unternehmensführung)
• Grade: 1
• Authors: Sylvia Ritt (Author), Friedrich Spatzenegger (Author)
• Publication Year: 2006
• Pages: 129
• Catalog Number: V53791
• ISBN (eBook): 9783638491402
• ISBN (Book): 9783656809722
• Language: English
• Tags: Outsourcing, Path, Return