Acknowledging External Services Providers as Leverage in Gaining Competitive

Advantage by Local Based Businesses in the Corporate World

Introduction
External Service Providers (ESPs) are enterprises that are separate legal entities from the
contracting company providing services such as consulting, software development — including
system integration and application service providers (ASPs) — and outsourcing. ESPs
supplement the skills and resources of an in-house IS department. External service providers
are tasked based on the contract requirements that are in contracts and blanket purchase
orders or on-demand purchase orders. A classic offshoring relationship between the client and
vendor is governed by service level agreements (SLAs) and obligations with accompanying
monetary penalties for non-compliance. This study will therefore help in understanding the
relevance of linking external service providers to internal services in the company or business.
This concept builds upon the various insights that have been undertaken by various researchers
in the business and in the field of services to bridge the gap of strategic implementation of
resources in business to gain competitive advantage.
Need for this Study
Contracting to third-party service providers for various business-related operations and
responsibilities provide an array of opportunities for cost reduction and business growth.
Outsourcing services make it easier for businesses to dedicate their time and resources to core
business and office operations. Hence, allowing business organizations to use their internal
resources for core competencies and essential business functions. The quality of work
completed by external service providers such as web developers, content marketers, or public
service providers will be specialized and, thus, better. Since companies typically outsource non-
critical business processes like financial services, they can allocate more time and effort to the
processes that distinguish them in the marketplace which leads to focusing in core strategies to
gain competitive advantage among other organizations of the same market.
Background of the Study
Several studies have concluded that having external service providers is one of the major
factors put in place by businesses in gaining competitive advantage, however this has also, not
been achieved in areas where innovation and resources of external service providers are only
limited. As a result, Digneo et al. (2020) in their study on business process outsourcing as one
of the best business models, concludes that the outlook for the global outsourcing industry in
2020 is positive growth. Growing competitiveness from new outsourcing destinations coupled
with the pressure on businesses to run cost efficiently will be the driving forces behind the
accelerated growth in the outsourcing industry. Startups will also play a vital role in the
outsourcing sector starting from this year, and this trend will continue in 2020. Moreover, the
industry will benefit from increased transparency in global outsourcing policies. Hence, this
study will therefore be focused on the factors of consideration for existing external service
providers in broadening their skills more to harness competencies, making them in demand to
business organizations.
Objective
The research paper seeks to achieve its general objective of acknowledging the relevance of
external service providers to gain competitive advantage by focusing on the following specific
objectives:
1. To determine the influence of perceived risks on linking internal services to external
services providers to gain competitive advantage by local based businesses.
2. To assess the influence of an organization’s innovativeness on use of external services
providers to gain competitive advantage by local based businesses.
Research Questions
1. Does perceived risks influence the usage of external services providers to gain
competitive advantage by local based businesses?
2. Does organizational innovativeness influence the use of external services providers to
gain competitive advantage by local based businesses?
Methodology
The study intends to use cross sectional survey design in determining the leverage in linking to
external service providers to gain competitive advantage by local based businesses.
The study will sample 250 business organizations in the Philippines, specifically in the Visayas
region.
The study will collect both primary and secondary data, and the quantitative data generated will
be carried out using descriptive statistics which includes percentage distribution, mean, and the
frequency counts. The qualitative data from the study will be transcribed and reported. The
relationship between the independent and dependent variables will be analyzed and explained
through multiple regression.
Research Timeline
The project is expected to be completed in 10 weeks with the following indicated as the
activities durations for every section of the research project:
Research Section Duration
1. Title, Introduction, Need for this 2 weeks
Study, and Background of the Study
2. Objective and Research Question 1 week
3. Research Methodology 1 week
4. Data Analysis interpretations and 2 weeks
discussions
5. Summary Conclusion and 2 weeks
recommendations
6. Reviewing work for final submission 1 week
References:

https://www.gartner.com/en/information-technology/glossary/esp-external-services-provider

https://www.sourcefit.com/outsourcing-blog/business-process-outsourcing-philippines/

https://biz30.timedoctor.com/business-process-outsourcing-industry/