TOPIC:

OUTSOURCING
FOCUSED TOPIC: I MPACT OF OUTSOURCING ON THE INFORMATION TECHNOLOGY SECTOR IN INDIA .

Research Questions:
1. What is outsourcing?

Answer:

Outsourcing is a common trend in information technology and other industries. Businesses

outsource for services that are seen as intrinsic to managing a business and serving internal and
external customers. Products, such as computer parts, and services, such as payroll and
bookkeeping, can be outsourced. In some cases, the entire information management of a company
is outsourced, including planning and business analysis as well as the installation, management, and
servicing of the network and workstations.

In addition to saving on overhead and labor costs, the reasons companies employ outsourcing
include improved efficiency, greater productivity and the opportunity to focus on core products and
functions of the business. Furthermore, more companies are looking to outsourcing providers as
innovation centers. According to Deloitte's 2016 outsourcing survey, 35% of respondents said they
are focused on measuring innovation value in their outsourcing partnerships.

2. Why do companies outsource?

Answer: There are many reasons why a company may choose to outsource certain business
functions. Some of the most common reasons include:

Reducing and controlling operating costs

Improving company focus
Gaining access to world-class capabilities
Freeing internal resources for other purposes
Streamlining or increasing efficiency for time-consuming functions
Maximizing use of external resources
Sharing risks with a partner company
 But these reasons aren't enough to implement a successful outsourcing program. In fact, companies
must ensure that they consider all of the components and are able to meet the requirements for
successful outsourcing.

REQUIREMENTS FOR SUCCESSFUL OUTSOURCING:

In the early days, cost or headcount reduction were the most common reasons to outsource. Today, the
drivers often are more strategic and focus on carrying out value-adding activities in-house where an
organization can best utilize its own core competencies.

THE CRITICAL AREAS FOR A SUCCESSFUL OUTSOURCING PROGRAM INCLUDE:

Clarity concerning company goals and objectives

A strategic vision and plan
Vendor selection
Relationship management
Properly structured subcontract and vendor agreements
Open communication with affects stakeholders
Senior leadership support and involvement
Careful attention to personnel issues
Short-term financial justification
Let's dive a little deeper into two of these requirements: open communication and executive
and senior leadership support.

VARIABLES OF RESEARCH (OUTSOURCING)

Repeat purchase intention: Repurchase behavior refers to the manner in which one makes a
decision to repeat a decision to purchase. It is also a decision-making measurement of a
service provider who has a tendency to buy, rent or use the service again in the future.
According to Kotler (2000a), customer repurchase intention may not always be accurate. It is
however the most important goal to which entrepreneurs must achieve if they wish for their
customers to be satisfied and plan to repurchase the same product.
Kotler (2000a), apart from cultural factors other factors such as social, personal and
psychological factors have influence on consumers behavior.
Cultural factors have to do with the culture, subculture or social class in which a consumer
identifies his/her self with.
Social factors have to do with the consumers family, reference groups and the consumers
role and status.
Personal factors are the lifecycle status and age of consumers. Also, the economic situation,
occupation, self-concept and consumers personality.
Psychological factors include perception, motivation, learning, attitude and belief of the
consumers.
Kotler and Armstrong (2001) described that there are two types of factors that helps in
determining and encouraging consumer purchase intention including both personal and
 stimulating factors. They stated that among the consumer decision making process,
understanding consumers sources of information for the product is crucial because it is the
early phase of consumer behavior and it may influence the rest of the consumer decision
making process. Personal factors include consumer personality in respect to demand,
incentive, attitude, access of information and adaptability.
Stimulating factors, on the other hand, can be used for planning how to catch consumers
attention and encourage their purchase intentions. This includes colors and sizes, product
comparisons with other products or services, product positioning (such as shelf location) and
originality. Meanwhile, service characteristics, price perception and service selection
behavior have direct effects on re-purchase intention investigated the satisfaction
consequences in repurchase situations. The empirical findings indicated that psychological
mediators are useful when repurchase situations are considered. The study provided the
roles of positive attitudes in the formation of Customer Service-Retail Purchase Intention
(CS_RPI). Also, three factors: Adjusted expectations, trust and positive attitude, were found
to have a significant mediating influence on the link of CS-RPI.
Chiang and Dholakia (2003) examined consumers intention to shop online during the
information acquisition stage. Specifically, the study incorporated three essential variables,
which are likely to influence consumer intentions (a) Convenience characteristic of shopping
channels, (b) Product type characteristics and (c) Perceived price of the product.
The results indicated that convenience and product type influence consumer intention to
engage in online shopping. When consumers perceived offline shopping as inconvenient,
their intention to shop online is greater. Also, online shopping intention is higher when
consumers perceive the product to be search goods than experience goods.
The study by Fitzsimons and Morwitz (1996) revealed that the existence of a positive and
significant relationship between the consumers attributes and buying intentions.
They stated that measuring intentions affect which brands consumers purchase. The studys
results suggested that somehow, the act of measuring intentions can affect consumers
cognitions about the potential purchase and change their subsequent purchase behavior.
Customer satisfaction: Scholars have studied the concept of satisfaction and according
to Limayem et al. (2007), customer satisfaction is the key to retaining customers using a
product or service. Moreover, this satisfaction holds a positive correlation with online
repurchase intention. Shelly (1975) indicated that major changes are now taking place in our
world. These changes, if only in addition to other factors, must lead us to rethink the
relationship between human beings and their environment. We may be facing either a world
of presently unknowable beauty or a world of foreseeable disaster. In either case, design (by
which it is meant that attempts to physically alter the environment of human beings to their
advantage) has a positive role to play.
Shelly (1975) conclusion was that satisfaction theory deals with two types of feelings,
positive and negative feelings. Most feelings fall into these categories. A positive feeling is
one which when increased tends to lead to an increase in happiness and other positive
feelings. Happiness is distinguished from other positive feelings by its feedback pattern,
 indicating that it is a more comprehensive feeling, having a greater influence on the person's
life. The exact relationships between positive and negative feelings and happiness appears to
be relatively complex and most easily understood when expressed mathematically.
The study by Tsai and Huang (2007), found that with the increase in overall customer
satisfaction a parallel increase in the customers desire to purchase and use it also occurs.
Tien et al. (2012) used structural equation modeling to analyze the perception of quality and
the recognition of the value of the service. It was determined that this has a direct and
positive influence on customer satisfaction and also influences the service in the future, or
the intention to repeat the purchase.
This corresponds to Ahmed et al. (2010) which stated that organizations always look forward
to long lasting success. For long lasting benefits and greater returns, organizations
continuously try to satisfy their customers in order to retain them and get their future
repurchase intentions. Future repurchase intentions of customers are outcomes of various
organizational efforts. As such, one of the most important determinants of customer
repurchase intentions discussed by researchers is offering, competitively, the best service
quality to customers. All organizations offer the best possible service to their customers in
order to retain them and create positive repurchase intentions in the future.
Ahmed et al. (2010) study researched the impact of service quality on customer repurchase
intentions and discovered that satisfaction is a variable which is an outcome of better service
quality and in return, it gives customers the zeal to stay with the service provider and creates
greater repurchase intentions for the customers. So, satisfaction is considered as a mediating
variable in the study. The study was conducted in the telecom sector (only cellular
companies) of Pakistan. Service quality was measured SERVQUAL model containing 5
dimensions of service quality (tangibles, responsiveness, empat hy, assurance and reliability)
Service user trust: Trust is essential to an organizations effectiveness, contributing to better
customer relationship with the service provider It is also important for organizations, both in
theory and research organizations, while reliability is significant to an organization both in terms
of organizational theory and research (Bijlsma and Koopman, 2003; Porter and Kramer, 2006)
since good cooperation is necessary in sustaining an organization as well as gaining success.
Today, elements that constitute organizational performance vary greatly and trust between
one another helps lead to effective organizational outcomes (Reynolds, 1997a). In addition,
trust has a positive effect on long-term customer satisfaction (Xu and Liu, 2010).
After having learned its importance, Lin et al. (2003) therefore determined there were four
aspects for measuring trust:

Trust in a company such as its reputation for products and good quality service

Good quality products and services such as preventing any disclosure of clients information

Customer interests before its own


Keeping of promises

Objectives of Outsourcing:

Outsourcing is on the increase. Even Dilbert is outsourcing to India now1 and Forrester research predict that
by 2015, US companies will outsource 3 million jobs compared to the present 300,000.2 This is no reason to
consider that it is right for you and without specific reasons for a program, it could be doomed to failure. You
must know why you want to go ahead with this. Success or failure, it will be impossible to define exactly what
happened if no objectives were ever defined. Every outsourcing programmer manager has a set of goals; it
may be a selection of many goals including cost reduction, access to new skill sets or improving the product
quality. If these desirable goals are not translated into specific objectives then it is difficult to define exactly
what is required from the outsourcing vendor and near impossible to measure success once the outsourcing
is complete. When I moved a large investment banking IT project from Singapore to India, there were a
number of reasons for the move:

Availability of expertise.
Quality of the end product.
Ongoing project cost.

I was facing serious recruitment problems in Singapore. I had some open positions in software
development that were unfilled for months and this lack of resource in open positions was a drag on
my projected deliveries. The late nineties saw a boom in the value of technologists and so my bank
was not considered to be an attractive place to work. Not when it only offered a regular salary and
dull office, compared to all the exciting start-up ventures offering companion animals in the office,
stock options and the chance of immense riches when the company (hopefully) moves to its IPO. I
could not make the Singapore office any more attractive to technologists, as that would mean
changing the entire culture of the organization for the sake of a few computer programmers. Bankers
are not as keen on Border Collies at work as Internet start-ups are. I needed to look around for a
place where talent was easier to find. I was not aware back then that I could just wait for the end of
the .com boom, at which point the dynamics of the technology labor market would change
considerably. Hindsight is a wonderful thing.

Quality was becoming a serious problem with my software production in Singapore. The team had started
moving from the maintenance of a mature system to development of a new, global mission-critical equity
trading system - alongside the earlier maintenance work. It was more exciting work, but the rapid deliveries
demanded by the traders in London and New York meant that quality took a nosedive. Even a single bug
could cause an expensive trading error and when a rollback was required, to reverse a new software release,
it meant support technicians from Tokyo to New York had to synchronize frantic weekend work to avoid
failures the following Monday. The mistakes had to end. As the system became more complex, the errors
became a part of the deal. The end users expected them. Each release required a number of attempts to get
right, yet without a quality assurance or testing team in Singapore there was no other way to deliver. I found
there was no support from other managers when I proposed the establishment of a QA team in Singapore, so
a new solution was required. The project cost was escalating as Singapore remuneration rates were shooting
up to be almost on par with European levels. The company had started working with technologists in
Singapore in part because of the cost differential, yet this was being eroded. Though they had the expertise, if
the company was going to pay the same price in Asia as a person might cost in Paris or London then it would
make more sense to have the people closer to home. I had thought about the possibility of moving everything
to London or Paris. Some of the existing people could be transferred and an immense amount of
management time, effort and expense would be saved by not travelling across the globe so frequently. A
group of technology managers in Asia had already started to consider all these issues. They had formulated a
plan where we would shift operations to Bangalore. I visited India and was soon a strong supporter of the
plan. My three major problems would be addressed:

Bangalore offers a rich seam of talent. Not only are the people there, but they are available
quickly so it is possible to ramp up from small beginnings to a large scale operation without
compromising on staff quality.
The plan was to create a new software company, linked to the parent firm, but independent. This
would allow a genuine concern for product quality, creating a need to start working to process
guidelines, managed by dedicated quality personnel.
The proposed costs were far lower than the Singapore staff costs. Even the fully-loaded hourly
rates for Bangalore, which included all costs (bonus, pension, office rent, heating, lighting etc.),
were cheaper than Singapore salaries alone.

RESEARCH PAPER ON OUTSOURCING

1. http://effectivepapers.blogspot.in/2011/02/term-paper-on-outsourcing.html
2. http://www.sciencedirect.com/science/article/pii/S1877042814031176
3. https://www.outsource2india.com/kpo/SuccessStories/academic-assignments.asp (case study on
outsourcing)
4. https://www.enotes.com/research-starters/global-outsourcing (Global Outsourcing)
5. https://www.writemypapers.org/examples-and-samples/research-paper-on-outsourcing-and-
insourcing.html