A willingness to undertake client-vendor partnerships and alliances has become a prime reason for outsourcing given that partnerships and alliances have become fundamental for business growth (Drucker 1995; McFarlan & Nolan 1995). Not surprisingly, there is an increased emphasis on the importance of the quality of partnership between the client organisation and the IT outsourcing vendor for successful IT outsourcing activities (Lee & Kim 1999; eGlobal-CIO 2003; Hajiyev 2004; Lum 2004; Hussin et al. 2006; Fleming & Low 2007). Organisations have realised the limitations of legal contracts and have sought more flexible and productive relationships which are based on mutual trust (Lee & Kim 2005; Fleming & Low 2007). Partnership in an IT outsourcing relationship is desirable for a number of reasons. Firstly, regardless of the complexity of an outsourcing relationship, it is difficult to write complete contracts to cover every eventuality. Second, there is considerable investment in assets which are specific to an outsourcing relationship. A partnership has continuity mechanisms built-in which protect and promote further investment by each party. In an ongoing and long term outsourcing relationship between a client organisation and outsourcing vendor, a partnership provides a mechanism for sustaining such a relationship (Kleeper Jones 1998; Sun, Lin & Sun 2002). However, there has been little empirical research which has critically examined partnership quality and its dimensions in the IT outsourcing relationship between the client organisation and the outsourcing vendor.
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Communication quality is an important factor for both parties, but the client interviewees considered it more essential as the client had outsourced its systems and infrastructure and required clear communication as to their status. C2 indicated that “after trust the most important factor within a relationship is to communicate and set expectations realistically with your partner”. He also recognised that the existence of “communication is an indication of ‘one team’ benefits.” The client was more influenced by mutual benefits than the vendor as the client placed greater emphasis on getting value for money for the systems and infrastructure it had outsourced. For instance C1 noted that the IS outsourcing relationship is “not a zero sum game – that every dollar that Vendor A gains is not a dollar that Client X loses.” C3 remarked that Client A’s objective was to “work with Vendor A to see if we could solve things mutually, how they increase their revenue and we increase our services.”
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Literally, outsourcing is an abbreviation for ‘outside resource using’ (Yang et al. 2007). According to Merriam-Webster ‘to outsource’ is: “to procure (as some goods or services needed by a business or organization) under contract with an outside supplier” (Merriam-Webster 2008). Researchers use many different definitions and terms for outsourcing. Beulen focuses on strategic sourcing, which he defines as “the way in which organizations obtain products and services in exchange for returns while considering the long-term impact on the context, intensity and scope of their internal and external relationships” (Beulen et al. 2006). Holcomb says the following with respect to strategic outsourcing: “We rely on both transaction-based and resource-based logics to explain the emergence of one such arrangement strategic outsourcing in which firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities used in production.” Kedia uses the term International Outsourcing of Services (IOS), which “refers to handing over of service functions (that were done in-house) by firms to providers (i.e., vendors) located in a (or several) foreign country(ies) where the former does not have ownership, authority or direct control” (Kedia et al. 2007).
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Management of relations and monitoring of third party providers is also a success factor, which is very essential in determining success. A large number of outsourced services often result in poor services, when their undertaking is not well monitored by the outsourcing company. Outsourcing does not mean a total delegation that leaves no responsibility within the organization, but rather a provision of more free time to engage in core activities and spare occasional time to monitor and assess the outsourced IT functions. Firms seeking to gain from agility and creativity of their third-party providers should consider being close more often with their providers to this is attained. Therefore, there is a need to have close relations with provider in order to be sure to succeed. Managing the relation between the provider and team members is essential to ensure that no conflicts emerge and that conflicts are solved. It should be kept in mind, that even though the functions are outsourced the provider is akin to a department in the company whose overall relation to the organization is essential in better performance and occasional correspondence and team-working is necessary for this to take place.
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PaaS is one of the categories of services provided by cloud computing. Instead of investing in new applications required to process client services, service providers would adopt applications in the cloud to manage, store, and process client services. In cloud based BPOs, Ciovica  identified PaaS as one of the core technical enablers of service delivery to clients. Similarly, IaaS is the delivery of computer infrastructure as a service, whereby, clients make use of storage devices, software, data centres, and network equipment instead of buying their own. According to Bourne , worldwide market forecast for public cloud services of all types could grow from $209 in 2016 to $246 billion in 2017. This phenomenon would continue to attract start-ups as well as organizations moving for expansion to start outsourcing internet enabled services (ITES) instead of building IT solutions. Organisations that embraced CC listed several benefits, which included lower costs, hypervisor protection against network attacks, low-cost disaster recovery, data storage solutions, real time detection of system tampering and ubiquitous network access . However, some organisations that are yet to incorporate the services of the cloud have continuously questioned the associated risks and security features to contain it. Over the years, the International Data Corporation (IDC) survey indicates that respective CIO’s cited security as the top challenge preventing their firms from adopting cloud services . This concern is corroborated by Seccombe  assertion that CC is targeted to provide better utilization of resources using virtualization techniques and to take up much of the work load from the client; however, it is burdened with security risks. Although delivery of services over the cloud has its proven benefits, Wilkins  suggests that both clients and providers should structure their Service Level Agreement (SLA) with the cloud partner in such a way that it would provide assurances of accountability, liability, compliance, ownership of data, and smooth disengagement when term of service has ended.
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The results from Table 4 indicate that IT outsourcing has become a well established business practice with Australian organisations. Although the results are sightly skewed towards shorter term relationships of less than 5 years (57 percent in total), 43 percent of the respondent organisations have been involved in an IT outsourcing relationship for 5 or more years. This is an interesting finding because the current literature suggests that organisations are moving towards shorter contractual arrangements with their IT outsourcing vendors (DiamondCluster 2004)
the relational exchange theory (Narasimhan et al. , 2008). The outsourcing relationship is viewed as a contractual relationship and, according to TCE, the outsourcing success is determined by transaction attributes (Wang, 2002). In addition, relational governance emerges from the shared values and processes established in the relationship (Vandaele et al., 2007), and inter-firm activities can be managed using relational elements or norms (Weitz and Jap, 1995; Zhang et al., 2003; Vandaele et al., 2007). The importance of the relational exchange through relational norms has increased academically and professionally (Lai et al., 2012; Yang et al., 2016). In this study, relational governance is operationalized through the relational norms. It is widely recognized that relational mechanisms in interorganizational cooperation include relational norms (Heide and John, 1992; Griffith and Myers, 2005; Liu et al., 2009). A basic characteristic of relational norms is their prescriptive behaviors by considering the relationship as a whole and limiting behaviors that favor the goals of the individual parties (Griffth and Myers, 2005). TCE is judged for its failure to consider relational norms (Zhang et al., 2003). Relational norms fill gaps in explicit contractual and formal agreements (Lusch and Brown, 1996). The two theories are complementary. Whereas the TCE, based mainly on efficiency, makes it possible to determine whether or not to outsource (Zhang et al., 2018), relational exchange theory proposes mechanisms that allow the outsourcing relationships to be more efficient and higher quality, guided by relational norms that make it possible to improve outsourcing performance. Therefore, first the TCE acts, and after the hotel has decided to outsource, rational exchange theory intervenes, although the latter has been researched less in the area of outsourcing. Therefore, both theories are necessary to better understand the outsourcing strategy.
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Others have taken a more analytic approach by developing business decision models to help facilitate a firm to formulate a business process outsourcing strategy. Kumar et al. (2007) present a toolkit for deciding what and when to outsource in order to optimize a company's process metric, profitability or productivity while minimizing risks and exposures. In their case study, India is identified as the destination of choice that generates the highest cash flow per year, when compared with alternative destinations of the U.S. and South Africa. Pai and Basu (2007) take a different approach by address managerial and legal issues related to technology outsourcing. While they pay close attention to intellectual property rights are related issues, there is a larger set of issues that are also applicable to BPO efforts. They identify the importance of compliance issues, contractual obligations, and due diligence to service agreements can affect the success of an outsourcing relationship.
The study findings are consistent with the work of Waweru (2014) who found a positive correlation between outsourcing and service delivery. Further, Badenhorst-Weiss and Nel (2008) concluded that outsourcing is a tool already effectively used by government institutions that strengthen their ability to render services to the community. Mkutu and Sabala (2007) paper appreciates the importance of outsourcing security services from private security companies. They argued that PSCs supplementary role to state security, protecting many properties and people including business premises and foreign missions, which in turn allow the economy to flourish. However, they highlight some critical issues, which may compromise provision of security by these firms. These include poor working conditions, which act as a disincentive to professionalism, poor training and education, and poor regulation and accountability.
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outsourced at least one activity, with cleaning, security, catering, maintenance, and manufacturing being the most common areas, the principal motivations being to increase the quality and to decrease of the activity outsourced. The criteria used for selecting outsourcing contractors were found to be depend on the quality and cost of the service offered and technical capability of contractors and the most important activities in evaluating outsourcers were through meetings, reviews of staff abilities and technical expertise, and by third party certification. The main benefits of outsourcing were reduced costs, removal of complacency from in-house staff, improved quality of service, increased management focus on core activities, and access to new capabilities. The main problems fixed with outsourcing were loss of control, problems with confidentiality, difficulties in communication & vender management, increased delivery times and opportunist exploitation by supplier.
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47 outsourcing efforts without sufficient experience. Other disadvantages to adopting outsourcing strategies include becoming dependent on outside suppliers for services, failing to realise the purported hidden cost savings to outsourcing, losing control over critical functions, having to face the prospect of managing relationships that go wrong and lowering the morale of permanent employees (Currie & Willcocks, 1997; Kleim, 1999). In European and North American IT system outsourcing practices research conducted by Lacity et al. (1995) found that nearly 70 percent of companies who have undergone 692 outsourcing state that they are unhappy with one of more aspects of their suppliers. According to Wong (2006), there are several key aspects of outsourcing of which the following five are considered the most significant: many outsourcing agreements suffer “suicide by change order”, what senior leadership does not understand will harm the organization, outsourcing vendors build in vagueness the “black box” of unexpected costs, outsourcing firms are starting to over stretch themselves and finally many customers want a flexible and innovative partner.. However, most firms gain control of their service levels, because their outsourcing agreement can quantify deliverables in the contract (Cooke, 2004). Surprisingly, many managers approach outsourcing as a solution without first defining the problem (McCauley, 2000). It is clear upon entering into outsourcing relationship the firm ended up with possible operational problems due to loss of control of the activities handled by contractor or new partner. Because of this, it is important in particularly at the initial stages to keep close observation on the operation and delivery of service. In addition, clear evaluation criteria on how to measure performance and outcomes must be established and controlled.
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There are several types of outsourcing and these include subcontracting, offshoring, etc., based on the collaboration between the firms involved. Subcontracting corresponds to a particular type of outsourcing, where the relationship between principal and third party company is characterized by a ‘dominant/dominated’ nature . Offshoring refers to the relocation of one or more processes or functions to a foreign location . This relocation can be carried out either in-house, as a tied or captive form of operations via the firm's own subsidiary; or through the use of an independent external supplier in the foreign market, referred to as outsourcing . Eventually, through offshore outsourcing, a firm's capability to tap into another firm's production facilities and/or service provision capacities in a foreign location is aided . Hence, depending on the level of partnership between the firms and managerial power over the outsourced production, different types of outsourcing exist . It is shown that offshore outsourcing can play a crucial developmental role in a company's penetration of foreign markets . Offshore outsourcing is considered as one of the strategic initiatives of firms to deepen internationalization.
The word L&D had been mutually agreed to explain the appropriate process of human resource training and development, employees training and development (Harrison, 2005). The term learning and development had long been a debate. Commonly the terminologies being used are varied among authors. Some may like to call it training and development, or the term employees learning and development, while and some researchers have used workplace learning, work based learning or even work based training. According to CIPD (2005), learning and development refers to an organizational process involves integration of learning and development process, operations and relationship. The results from its effective implementation are enhanced organizational effectiveness and sustainability and enhanced personal competence, adaptability, and employability for the individual. It is therefore a critical business process, whether in for-profit or not-for-profit organizations.
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Information on outsourcing can enter the public arena from different sources. The internet has facilitated this by transmission of information from various sources such as trade magazines, associations, business directories and periodicals. Various market research firms such as Gartner, Cross-tab and Everest Research Institute sell research on IT outsourcing, as independent research and analysis organisations. This information then moves to the public arena via the internet, trade magazines and wire services where a summarised version is reported as fact without scrutiny. This is not to say that information is not well researched, correct or factual. An example of this is a report which states, ‘outsourcing market drops in 2009’ but goes on to also contain the line ‘potential near-term risk issues arose in Mexico, El Salvador, Poland and Thailand’ (Tims & Cook, 2009). What does this actually mean and has this been a factor in the market drop? The ‘Market Drops’ quote was widely reported by various online and business services such as Cybermedia News and Euroinvestor (Business Wire, 2009; Global Services, 2009; Reuters, 2009) but the ‘Risk Issues’ quote was ignored. This selective reporting then flows to the public arena without explanation or qualification. This flow of information provides real opportunity for incomplete and unreliably cited sources and unsubstantiated so-called facts to be reported and repeated. It has been argued that the internet and the media are riddled with half-truths, untruths, cover-ups and propaganda.
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A outsourcing decision is not only influenced by the business itself, that is the effect of outsourcing object, but also influenced by the main body from outsourcing, therefore, as an enterprise's strategic decision, outsourc- ing degrees strategy is in a great extent influenced by the enterprise itself characteristics. According to the topic of this paper and measurable request, in this re- search we use enterprise scale, manager attention level and outsourcing experience to describe the characteristics of the enterprise. Firstly, allocations of human resource management will influent the enterprise outsourcing de- gree. Secondly, the degree of top managers’ intervention indicates value degree and the strength of the execution. Outsourcing experience is also a factor an enterprise must take into account when it makes the outsourcing decision, studying the influence on human resources management outsourcing degree; we put forward the following research problem and hypothesis:
After the initial stage, the evolutionary tendency lies in moving the scope from an experimental or cost focussed approach to one that can be characterized by the obtainment of operational enhancements. Since companies have limited resources, considerations other then transaction costs need to be made in order to obtain the biggest leverage from these resources. This implies allocating resources to those activities that generate this leverage while outsourcing those that do not. This also involves processes that companies may be able to perform internally but would require significant investment of existing (scarce) resources. Furthermore, firms may be economically unable to generate these capabilities and resources internally and as such have no other option but to source these from external suppliers (Cohen and Young, 2006). This phase is therefore characterized by firms contracting suppliers who are better capable of executing the outsourced activity. These contracts offer companies ways to gain relevant capabilities without having to become knowledgeable in issues that they are not skilled in and do not want to invest in (McFarlan and Nolan, 1995). This was also identified in the transformation of the IT function at British Petroleum. In 1990 British Petroleum concluded that most of their current IT function was better done by suppliers since there is always someone else who ‘does it better’. They subsequently reorganized their IT function as locating, purchasing and integrating of technologies (Cross, 1995). A recent study also shows this trend as 23% of involved companies are using considerations such as: ‘improve time to market’, ‘improve quality’ and ‘cost predictability’ (Ventoro, 2005). Using Monczka and Trent’s terminology this implies a more pro-active focus as opposed to one that is re-active.
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6.11.1 Impact of Profitability on Logistics Outsourcing Relationships: Cross-case discussion 207 6.11.2 Impact of Service Accuracy and Reliability on Logistics Outsourcing Relationships: Cross–case discussion: .............................................................................. 211
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All three sources of the contract framework described above have the most provisions in the service start-up and implementation processes of the outsourcing operation stage. Only the public hospitals have comprehensive contract in the other three processes - the on-going service development, review and project close. Therefore, there is still not much issues or matters identified in the three processes, besides the public hospital practice. Even if the “to be identified” issues may not be incorporated or detailed out in a partnership sourcing contract, still successful management of an outsourcing contract will depend on them. The client, consultant, contractor and users have to interact in an environment with all the relevant issues in existence. It is suggested that studies of these “to be identified” issues in the on-going service development, review and project close processes be conducted to help enable smooth management of outsourcing contracts.
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History has repeatedly shown that in a highly competitive global environment, many manufacturers begin to either set up manufacturing facilities in lower-cost locations or outsource components and finished products from lower-cost producers on a contractual OEM (original equipment manufacture) basis. Without established sourcing plans, distribution, and service networks, it is extremely difficult to exploit both emerging technology and potential markets around the world simultaneously. As a result, the increased pace of new product introduction and reduction in innovational lead time calls for more proactive management of locational and corporate resources on a global basis. Following this trend, increased outsourcing of manufacturing activities has become a prominent part of the restructuring of firms‘ supply chains since the 1990s. Many academics and consultancy firms seem to support the view of outsourcing as one of the key drivers of superior performance.
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performance of the service provider depends on it. Healthcare organizations engage in information system outsourcing for various reasons which are strategically crucial. The leaders and decision makers in the healthcare industry need to make sure that the service providers have the right mix of competencies which align with their requirements and strategic goals. Due to the dynamic nature of the ever evolving information systems and information technology infrastructure the process and the practice of the outsourcing is changing rapidly as well, specially in the sensitive area of healthcare. Therefore, extensive and continued research is required in the area of healthcare and outsourcing.