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Outsourcing of front‐end business processes: Quality, information, and customer contact
Author(s) -
Balakrishnan Karthik,
Mohan Usha,
Seshadri Sridhar
Publication year - 2008
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2007.08.001
Subject(s) - outsourcing , sophistication , vendor , task (project management) , business , process management , marketing , quality (philosophy) , computer science , industrial organization , operations management , economics , management , social science , philosophy , epistemology , sociology
We examine the recent supply chain phenomenon of outsourcing front‐end business processes in this paper. Few, if any, of the existing theories provide satisfactory explanation for the rapid growth in this area. We use a model proposed by Sridhar and Balachandran [Sridhar, S.S., Balachandran, B.V. 1997. Incomplete information, task assignment, and managerial control systems. Manage. Sci. 43(6), 764–778] to determine the factors that might contribute to this phenomenon. Our analysis reveals that the ability of the vendor to forecast the task environment without bias and to gain sophistication in interpreting contract terms might make the firm indifferent between outsourcing and retaining front‐end processes in‐house. We validate our findings against the work of Apte and Mason [Apte, U.M., Mason, R.O., 1995. Global disaggregation of information‐intensive services. Manage. Sci. 41(7), 1250–1262], who develop a theoretical framework to identify criteria for companies to select services to be outsourced. They base their decisions predominantly on the nature of “customer contact.” The combined theories are shown to provide a rich framework for identifying customer‐facing tasks that can be outsourced.