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The Next Step For The CEO Moving IT-enabled Services Outsourcing To The Strategic Agenda
The Next Step For The CEO Moving IT-enabled Services Outsourcing To The Strategic Agenda
www.emeraldinsight.com/1753-8297.htm
SO EXPERT VIEWPOINT
3,1
The next step for the CEO
Moving IT-enabled services outsourcing
62 to the strategic agenda
Leslie Willcocks
The Outsourcing Unit, Department of Management,
London School of Economics and Political Science, London, UK
Abstract
Purpose – This paper aims to distill research findings that will influence CEO and top team
behaviour.
Design/methodology/approach – The findings are based on case study research into 650 plus
organisations and their outsourcing arrangements in Europe, Asia Pacific and USA.
Findings – CEOs have five reasons for ensuring IT-based services outsourcing is included in their
strategy discussions. IT outsourcing impacts upon a firm’s market value. The sheer size of
outsourcing expenditure merits senior management attention. Getting outsourcing wrong can
seriously damage corporate health. At the same time, the evidence shows examples of outsourcing
playing a strategic role for many businesses, and only the CEO has the real bargaining power to
make outsourcing deliver this strategic dividend.
Research limitations/implications – The research was carried out by the LSE’s Outsourcing Unit
and uses in-depth longitudinal case studies to identify outsourcing practices that work, in terms of
achieving superior business results.
Practical implications – The paper spells out the reasons why CEO and top teams should be
engaged in their outsourcing decision making and management.
Originality/value – The paper establishes well researched grounds for why CEOs and top teams
need to act differently if more effective outsourcing is to be achieved.
Keywords Outsourcing, Competitive advantage, Communication technologies, Chief executives,
Strategic choices
Paper type Viewpoint
Introduction
Why should hard-pressed CEOs devote attention to the outsourcing of IT-enabled
services? Because a substantial, and rapidly rising, amount of most large
organisations’ cost base is already with outsourcing service providers. Because getting
large-scale outsourcing wrong can seriously damage the business. Because, from now,
outsourcing is part of any future strategy. In our experience, the announcement of a
large-scale outsourcing deal regularly has a positive effect on share price that can last
between three and ten months. That said, the opposite can occur if the market
perceives outsourcing to be an inadequate measure, given the scale of difficulties
involved or where the deal seems to be flawed or hastily contrived, or where the CEO
and organisations ultimately fail to deliver the financial results stated or implied in the
initial announcement.
More positively, the evidence from our LSE Outsourcing Unit research shows
Strategic Outsourcing: An clearly that outsourcing – properly planned, resourced and managed – can deliver
International Journal significant competitive advantage to companies and organisations in all sectors. But
Vol. 3 No. 1, 2010
pp. 62-66 only when the CEO plays a key role – taking crucial strategic decisions, creating vital
# Emerald Group Publishing Limited
1753-8297
capabilities, putting in place integrated management processes and applying effective
DOI 10.1108/17538291011023089 monitoring and evaluating mechanisms. Let us look at these issues in more detail. The
Outsourcing Unit’s research points (recent publications that distill this research are The next step
Willcocks and Lacity (2009), Lacity and Willcocks (2009), Willcocks and Lacity (2006), for the CEO
Oshri et al. (2009), Lacity et al. (2010), Willcocks and Craig (2009) and Willcocks et al.
(2009). Further details and downloads are on: www.outsourcingunit.org to five main
reasons why outsourcing must now move up the CEO agenda.
References
Collins, T. (2004), ‘‘MPs given little comfort on state of child support agency systems’’, Computer
Weekly, 28 October, p. 5.
Cullen, S. and Willcocks, L. (2003), Intelligent IT Outsourcing, Butterworth Heinemann, Oxford.
Earle, A. (2004), ‘‘End of the affair: bringing outsourced operations back in-house’’,
Computerworld, 31 May, p. 38.
Kern, T. and Willcocks, L. (2001), The Relationship Advantage: Information Technology,
Outsourcing and Management, Oxford University Press, Oxford.
Kern, T., Willcocks, L. and Van Heck, E. (2002), ‘‘The winner’s curse in IT outsourcing: how to
avoid relational trauma’’, California Management Review, Vol. 44 No. 2, pp. 47-69.
SO Lacity, M. and Willcocks, L. (2001), Global IT Outsourcing: In Search of Business Advantage,
Wiley, Chichester.
3,1 Lacity, M. and Willcocks, L. (2003), ‘‘Information technology sourcing reflections’’,
Wirtschaftsinformatik, special issue on Outsourcing, Vol. 45 No. 2, pp. 115-25.
Lacity, M. and Willcocks, L. (2009), Information Systems and Outsourcing: Studies in Theory and
Practice, Palgrave, London.
66 Lacity, M., Willcocks, L. and Zheng, Y. (Eds) (2010), China’s Emerging Outsourcing Capabilities,
Palgrave, London.
Miller, A. (2004), ‘‘Outsourcing options and performance management in the private and public
sectors’’, paper presented at the Outsourcing Summit, London, 22 November.
Oshri, I., Kotlarsky, J. and Willcocks, L. (2009), Handbook of Global Outsourcing and Offshoring,
Palgrave, London.
Rohde, L. (2004), ‘‘Sainsbury, Accenture to Redo Outsourcing Pact’’, Computer Weekly, 25 October,
p. 3.
Wighton, D. (2004), ‘‘JP Morgan scraps IT deal with IBM’’, Financial Times, 16 September, p. 34.
Willcocks, L. and Craig, A. (2009), Outsourcing Enterprise5: Step-Change – Collaborate to
Innovate, Logica, London.
Willcocks, L. and Lacity, M. (2006), Global Sourcing of Business and IT Services, Palgrave, London.
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BPO and Offshoring, Palgrave, London.
Willcocks, L., Griffiths, C. and Kotlarsky, J. (2009), Beyond BRIC: Offshoring in Non-BRIC
Countries – Egypt A New Growth Market, ITIDA, London.