Business Process Outsourcing to Emerging Markets: A Knowledge Management Approach to Models and Strategies

Business Process Outsourcing to Emerging Markets: A Knowledge Management Approach to Models and Strategies

Jurgis Samulevicius (Vilnius Gediminas Technical University, Lithuania) and Val Samonis (Cornell University, USA)
DOI: 10.4018/978-1-59140-875-8.ch007
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A major phenomenon of globalization, outsourcing is a complex and controversial issue. It occurs when companies contract out activities previously performed in-house or in-country to foreign (usually offshore) companies globally. Couched in the terms of a SWOT analysis and using a modified Harvard-style case study that was subjected to the SWOT analysis, the chapter analyzes business process outsourcing (BPO) to emerging markets, frequently called outsourcing or offshoring in short. The overarching advantage of outsourcing is that it allows a business to focus on core activities as called for by core competence, strategic alliance, and competitive advantage theories of international business. Such a global restructuring of production has been sometimes called the true WMD (weapon of mass destruction) of jobs in the developed world. However, a more balanced approach could borrow the term “creative destruction” from the prominent Austrian economist Josef Schumpeter and emphasize the all-important transformational aspect of outsourcing. A transformational aspect of outsourcing is evidently very important for emerging markets but also for many companies in the developed world; therefore, BPO is sometimes called BTO (business transformational outsourcing). The global digital/knowledge economy offers unprecedented opportunities to produce and sell on a mass scale, reduce costs, and customize to the needs of consumers, all at the same time. Whether you live in a large country such as the U.S. or China, mid-sized country such as Canada or a smaller country such as Lithuania, your potential market is of the same global size. And you can source (netsource) inexpensively wherever you wish. Added to that are immensely increased opportunities to access new knowledge and technologies, driving productivity and living standards further up. BPO to emerging markets is or should be driven by those fundamental reasons having to do with rapid organizational change, reshaping business models to make them viable in the long term, and launching new strategies. This is the essence of transformational outsourcing. In this chapter, BPO is used in the broader, integrated, and comprehensive understanding of changes in the company’s business models and strategies but first of all the company’s changing core competencies and competitive advantages: partnering with another company to achieve a rapid, substantial, and sustainable improvement in company-level performance. A knowledge management approach is advocated in this research that is to be continued in the future. The chapter concludes that outsourcing is a wave of the future. Postcommunist and other emerging markets countries are well advised to jump to these new opportunities as they represent the best chance yet to realize the “latecomer’s advantage” by leapfrogging to technologies and models of doing business which are new for Western countries as well. The chapter analyzes and outlines some of the ways in which contemporary and future business models are deeply transformed by the global digital/knowledge economy. Global outsourcing provides a compelling platform to research the issues of upgrading competitive advantage in developed countries and contract out non-core competencies to emerging markets. Therefore, suggestions for further research are included in the chapter as well.

Complete Chapter List

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Harbhajan Kehal, Varinder Singh
Table of Contents
Chapter 1
Glauco De Vita, Catherine L. Wang
This chapter tracks the evolution of outsourcing theory and practice in order to develop a taxonomy of outsourcing generations. Our taxonomy... Sample PDF
Development of Outsourcing Theory and Practice: A Taxonomy of Outsourcing Generations
Chapter 2
Subrata Chakrabarty
Many terminologies have grown out of the outsourcing and offshoring bandwagon. While the corporate world continues to experience these phenomena... Sample PDF
Making Sense of the Sourcing and Shoring Maze: Various Outsourcing and Offshoring Activities
Chapter 3
Ashima Goyal
This chapter shows that ICTs make possible a more inclusive global trade, since now labour intensive components of production can be unbundled and... Sample PDF
Global Sourcing: East-West Divide or Synthesis?
Chapter 4
Parthasarathi Banerjee
This chapter investigates conditions when economic profit can be made from outsourcing. In order to have profit a firm must pursue strategies of... Sample PDF
Strategies of Outsourcing: From De-Risking to Uncertainty
Chapter 5
Fjodor Ruzic
In today’s dynamic e-business environment where fast time to market is imperative, where information and telecommunications technology is costly and... Sample PDF
New Ethics for E-Business Offshore Outsourcing
Chapter 6
Smita Gupta, Narendra S. Chaudhari
Offshore outsourcing is a term covering a range of information technology (IT) and business services delivered to companies in developed countries... Sample PDF
Information Technology Offshoring Outsourcing: A Perspective kof Advanced Countries
Chapter 7
Jurgis Samulevicius, Val Samonis
A major phenomenon of globalization, outsourcing is a complex and controversial issue. It occurs when companies contract out activities previously... Sample PDF
Business Process Outsourcing to Emerging Markets: A Knowledge Management Approach to Models and Strategies
Chapter 8
Luke Ho, Anthony S. Atkins
In recent years, outsourcing deals have increased in number and the strategic importance of the decision-making process has correspondingly... Sample PDF
Outsourcing Decision-Making: A Review of Strategic Frameworksand Proposal of a Multi-Perspective Approach
Chapter 9
Alev M. Efendioglu
Recently, outsourcing/offshoring has gained significant exposure in the popular as well as academic publications, with authors arguing the many... Sample PDF
Outsourcing and Offshoring: Issues and Impacts on Venture Capital
Chapter 10
Siri Terjesen
This chapter reviews the outsourcing and offshoring of finance activities and the socioeconomic implications for home and host countries. Part one... Sample PDF
Outsourcing and Offshoring Finance Activities
Chapter 11
Kirk St. Amant
This chapter examines the role of open source software (OSS) in international outsourcing practices that involve the transfer of knowledge work from... Sample PDF
Open Source and Outsourcing: A Perspective on Software Use and Professional Practices Related to International Outsourcing Activities
Chapter 12
Subrata Chakrabarty
The primary purpose of this chapter is to present descriptive real-life case studies of different offshore-outsourced custom software development... Sample PDF
Real Life Case Studies of Offshore Outsourced IS Projects: Analysis of Issues and Socio-Economic Paradigms
Chapter 13
Varadharajan Sridhar, Sangeeta S. Bharadwaj
IT-enabled services (ITES) in India have registered tremendous growth in recent years. Availability of English speaking trained manpower and low... Sample PDF
Growth of Outsourced IT-Enabled Services in India: A Systems Dynamics Approach
Chapter 14
Nicholas B. Beaumont
This chapter notes and explains the increasing use of outsourcing and service level agreements (SLAs); proposes and describes an outsourcing... Sample PDF
An Overview of Service Level Agreements
Chapter 15
Piyush Sharma, Rajiv Mathur, Abhinav Dhawan
Offshore outsourcing is a fast-growing aspect of the world economy today and it has drawn attention from policy makers as well as public at large in... Sample PDF
Understanding Consumer Reactions to Offshore Outsourcing of Customer Services
Chapter 16
Michael Amberg, Martin Wiener
Increasing competition in globalized markets drives IT offshoring worldwide. In the United States, the relocation of IT activities and processes to... Sample PDF
IT Offshoring: A German Perspective
Chapter 17
Felix R. Doldán Tie, Paula Luna Huertas, Francisco Jose Martínez Lopez, Carlos Piñeiro Sanchez
The practice of information systems/information technology (IS/IT) outsourcing is a major issue which has received much attention, as shown by the... Sample PDF
Information Systems/Information Technology Outsourcing in Spain: A Critical Empirical Analysis
Chapter 18
Arjun K. Paiu, Subhajit Basu
The practice of information systems/information technology (IS/IT) outsourcing is a major issue which has received much attention, as shown by the... Sample PDF
Emerging Legal Challenges in Offshore Outsourcing of IT-Enabled Services
Chapter 19
A. Hoecst, P. Trott
In this chapter we argue that firms have responded to the intense pressure from markets and financial operators to reduce asset investments by... Sample PDF
Does Strategic Outsourcing Undermine the Innovative Capability of Organizations?
Chapter 20
Anne C. Rouse, Brian J. Corbitt
Much of the research that has been carried out into outsourcing is based on relatively successful case studies. Yet drawing inferences from case... Sample PDF
Analysis of a Large-Scale IT Outsourcing "Failure": What Lessons Can We Learn?
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