OUTSOURCING BOOK edited by

Prof. Ruth Taplin published by Routledge

Book structure:

Overview: Prof. Ruth Taplin - Director Centre for Japanese and East Asian Studies – an
explanation will be given as to the dearth of literature concerning outsourcing except for a few
narrow studies on cost effectiveness. Outsourcing is a growing phenomenon and it needs to be
assessed from a broad standpoint. Definitions will be given of outsourcing, in sourcing and back-
sourcing, outsourcing life cycles, the role of Human Resources, the need to go beyond viewing
outsourcing as a cost-saving exercise and assess it in all its dimensions, also from an
interdisciplinary viewpoint of management, finances, human resources, organisational psychology
and socialisation. The need will be explained for a cross-cultural, cross border approach
assessing how outsourcing is manifested within different cultures.

Negotiation and enforcement of service level agreements - Ivan C. Schouker,

Chief Executive American Express Financial Services Ltd.

Making Outsourcing work- from service level agreement to partnership

The pervasiveness of outsourcing and its emergence as a common operational management tool
in the service sector feeds a wealth of debates in corporate strategy and public policy.
Outsourcing is however a fundamental component of today’s corporate fabric; like any
relationship that has to withstand changing circumstances over time, it is hard work. Performance
statistics used often parallel marriage relationships in the Western world; one can for instance
quote the 2000 Dun & Bradstreet Barometer of Global Outsourcing ’20 to 25% of all outsourcing
relationships fail within two years and 50% fail within five’.
What is often overlooked is that the design itself of an outsourcing agreement, from the initial
negotiation stage to the ongoing relationship management, can make or break the rationale for
entrusting to a third party key production and/or servicing delivery components. Trends and
experience in making outsourcing work point at five essential operating principles, reviewed in
turn in this chapter
 Ensure clarity in value creation and coherence with corporate strategy
 Seek business and legal risk balance in selecting and negotiating
 Elevate SLA ‘morals’ or how to avoid a legalistic relationship
 Manage governance through cross-organisational teams
 Plan evolution and scope restructuring upfront
As globalization demands ever-accelerating operational improvements and constant re-evaluation
of core competencies, successful organisations will transform traditional transaction-based
suppliers’ contracts into flexible and genuine partnerships with their outsourcers.

Recruiting policies and outsourcing and Transactional Cycles (Two Chapters)- Dr. Stephanie
Morgan, Birkbeck College, University of London and Director Crosslight Consulting Ltd,

The human side of Outsourcing

Research on outsourcing has tended to concentrate on cost-benefit analysis and data
collected from senior management. The experience of staff transferred is not clearly
understood, despite their crucial role in the future success of the contract. This chapter
discusses evidence from a longitudinal study, including depth interviews, with a range of IT
staff undergoing an outsourcing transfer. The analysis focuses on their experience of the
transfer, their relationship with both organisations, and the influence of HR and management.
The importance of procedural justice is highlighted, alongside issues with socialising staff into
the new organisation. The impact on performance is considered, alongside practical advice
for improving both the transfer experience and the ongoing organisational relationships.

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 The outsourcing life-cycle
When considering outsourcing, many organisations focus on the initial contract and choice of
vendor. However, the importance of understanding the full lifecycle should not be
underestimated. This chapter outlines the complete outsourcing lifecycle, emphasising key
milestones, processes and issues for each stage. Beginning with the initial scoping, moving
through the negotiations and the transition to the management of the contract itself; the
importance of considering the contract ending and future transitions right from the start is
highlighted. The lifecycle transitions for the staff involved (whether transferred or remaining
in-house) is also discussed. The likely implications of the success or otherwise of different
stage processes for future stages, including new contract negotiations or back-sourcing, are
assessed.

Insourcing – Cint Kortmann – Director and Founder, Talent & Pro, an insourcing agency –
Insourcing occurs when contractors are brought in to assist with work and setting up an external
division which is expected to find additional business to their own. This chapter looks at how an
insourcing company works in practice.

The (Re) Insurance business needs to react rapidly to changes in the market due to new
legislation and fierce competition. Therefore, organisations need to be well structured and
flexible. This also requires good operations management. Primarily, this is based upon having
excellent permanent staff; optimizing their motivation, flexibility and productivity is essential for
achieving this.

The highest productivity levels can be achieved by having a constant workflow. This, of course, is
a utopia in the (Re) Insurance industry. In reality however, there will always be peaks in the
workflow. It is crucial to respond appropriately to these peaks.

Insourcing solutions handle these peaks. It enables companies to keep their employees in
optimal form and to pass this onto clients.

Talent&Pro provide access to a highly skilled and motivated group of people, providing young
people who have chosen to build a career in the insurance industry and are fully committed to
making each interim role or project a success. Apart from their academic qualifications, they are
either doing their CII’s or have finished them and are in management development programmes.

As a networking company Talent&Pro are a partner to their clients. Their goal is to understand
the challenges that their clients are facing and to tailor Insourcing solution accordingly. Only then
can they provide clients with people who have the right knowledge, attitude and skills that is
required for a job.

Talent&Pro have worked with a variety of (Re) Insurance organisations in the past. Assignments
have been in fields such as Risk Management, Compliance, Claims and Underwriting.

Risk and Insurance Considerations in Outsourcing Banking and Related Financial Services-
Oliver Prior The First City Partnership Ltd.- This chapter looks at how the process of outsourcing,

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 particularly to overseas financial service providers is becoming an accepted practice. In a true
outsource situation between equal partners, the transfer of services normally involves the
contractual transfer of most of the risks associated with providing the services. Where the
outsource service provider is not the equal of the party seeking to outsource the service then the
simple transfer of risk via the use of contractual indemnities alone will not sufficiently address the
risk issues which means in the latter case insurance becomes vitally important.

IT Governance in the Boardroom and the role of SMEs (Two Chapters)- Mark Sickles, CEO
Trestle Group New York- This chapter looks at the following questions;

What is governance?

What is the purpose of IT?

What is the role of the board in fulfilling this purpose?

What is the role of management in fulfilling this purpose?

The SME chapter looks at the following;

How can these roles be managed to be complementary? Large corporations have benefited from
offshore outsourcing initiatives for the past 15+ years. These benefits include cost savings and
access to skilled and flexible work forces. Advances in technology and enhanced business
processes are allowing small to medium sized organizations(SME) to realize the same benefits. The
traditional SME employs less than 250 individuals, an annual turnover of no more than 50 million
and a balance sheet total of 43 million.

Comparative outsourcing case studies:

Japanese automotive sector– Prof. Garel Rhys, University of Cardiff, Wales

The motor industry has always engaged in outsourcing although it was either
called buying-in or, confusingly, buying-out. During the last thirty years the
proportion of a vehicle's total costs that have been outsourced has tended to
increase. At the same time there has been a change in the supply chain to the
vehicle makers which has been a response to and a facilitator of increased
outsourcing. The rationale behind outsourcing are external economies of scale
and reduced non-scaler costs. The catalyst for this has been the experience of
the Japanese vehicle makers on the one hand and the need for increased
efficiency in ever-increasingly competitive vehicle markets. In short, in the
current world auto sector there is nowhere for the inefficient to hide.

Chinese/British automotive sector- Ian Pogson – Ricardo

Outsourcing has been a feature of the automotive industry in the UK for many years. Based on
26 years of direct experience, Ian shall cover:-

 Major unit supply to specialist manufacturers in the UK

 Links between manufacturers and major unit sharing and supply
 Parts supply to suit market needs
 Outsourcing as quality improvement
 Outsourcing as cost saving

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  Working in market directly outsourcing
 Supporting local resource activities
 Interpretations of “quality”
 Project Management across cultures.

South Korean Outsourcing IT off-shoring- Dr. Hyun Jeong Kim, Assistant Professor of
Management, College of Business Administration, Inha University, Incheon , South Korea
Outsourcing is one of the major issues facing organizations in today's rapidly changing business
environment. Among established outsourcing practices, there has been much interest in IS/ IT
outsourcing with the estimated market size of US$ 59.6 billion by 2005 (Gartner Group, 2004).
IS /IT outsourcing in Korean context is not exception, which often carried out by external service
provider(s) in order to acquire strategic, economic, and technological advantages. This chapter
presents a current outlook of recent developments of outsourcing issues and practices in Korea
attempting to explain if there are country-specific pattern emerging rather than global
convergence of strategies and practices with the examples from a case. By reviewing elements
such as types that Korean organizations outsource and diverse circumstances that prompt
outsourcing decisions, this chapter will help readers to understand outsourcing in country specific
context i.e. Korea.

Polish Outsourcing: a case of Eastern European Outsourcing –Prof. Alozjy Nowak, Dean
School of Management, Warsaw University, Poland -Forthcoming