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Outsourcing support functions: Identifying and managing the good, the bad, and the ugly

Author

Listed:
  • Raiborn, Cecily A.
  • Butler, Janet B.
  • Massoud, Marc F.

Abstract

Outsourcing the purchase of components or "hard goods" is not a new phenomenon: it is known as the "buy" portion of a company's common make-or-buy decisions. In the current service-oriented economy, however, make-or-buy decisions are now often do-or-buy decisions that reflect the strategic question of whether outside entities should be hired to perform significant support service activities. Support functions such as information technology and customer service can be outsourced to provide many organizational benefits. Companies frequently point to the cost savings for labor and training, but also cite the benefits of releasing corporate resources for alternative uses and allowing the business to focus on its core competencies. Outsourcing support functions is not simple, though, and companies must manage the related strategic, quantitative, and qualitative risk factors. This article discusses some of the potential risks that must be faced when a company outsources internal support functions, and describes how the Committee of Sponsoring Organizations of the Treadway Commission's Enterprise Risk Management (ERM) model can assist in managing and controlling these risks.

Suggested Citation

  • Raiborn, Cecily A. & Butler, Janet B. & Massoud, Marc F., 2009. "Outsourcing support functions: Identifying and managing the good, the bad, and the ugly," Business Horizons, Elsevier, vol. 52(4), pages 347-356, July.
  • Handle: RePEc:eee:bushor:v:52:y:2009:i:4:p:347-356
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    Citations

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    Cited by:

    1. Chan, Ken, 2023. "Outsourcing government relations: Use of outside lobbyists when in-house capacity exists," Business Horizons, Elsevier, vol. 66(2), pages 215-224.
    2. Prempeh, Kwadwo Boateng & Nsiah-Asare, Evelyn, 2017. "Evaluating the Impact of Outsourcing Strategy on Procurement Performance of Selected Technical Universities in Ghana," MPRA Paper 80191, University Library of Munich, Germany.
    3. Gunasekaran, Angappa & Irani, Zahir & Choy, King-Lun & Filippi, Lionel & Papadopoulos, Thanos, 2015. "Performance measures and metrics in outsourcing decisions: A review for research and applications," International Journal of Production Economics, Elsevier, vol. 161(C), pages 153-166.
    4. Yongrok Choi & Xiaoxia Ye & Lu Zhao & Amanda C. Luo, 2016. "Optimizing enterprise risk management: a literature review and critical analysis of the work of Wu and Olson," Annals of Operations Research, Springer, vol. 237(1), pages 281-300, February.
    5. Asatiani, Aleksandre & Copeland, Olli & Penttinen, Esko, 2023. "Deciding on the robotic process automation operating model: A checklist for RPA managers," Business Horizons, Elsevier, vol. 66(1), pages 109-121.
    6. Blaž Frešer, 2022. "Multidimensional Model of High-Growth Companies: Do COVID-19 and the Ukraine–Russia Crisis Lead to Differences?," Sustainability, MDPI, vol. 14(22), pages 1-25, November.
    7. Jeevan Jyoti & Himani Arora, 2013. "Impact of Client–Vendor Relationship on Firm’s Financial Performance: A Study of Outsourcing Firms," Global Business Review, International Management Institute, vol. 14(4), pages 691-709, December.
    8. Yongrok Choi & Xiaoxia Ye & Lu Zhao & Amanda Luo, 2016. "Optimizing enterprise risk management: a literature review and critical analysis of the work of Wu and Olson," Annals of Operations Research, Springer, vol. 237(1), pages 281-300, February.
    9. Williams, Christopher & Durst, Susanne, 2019. "Exploring the transition phase in offshore outsourcing: Decision making amidst knowledge at risk," Journal of Business Research, Elsevier, vol. 103(C), pages 460-471.

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