Purpose – Describes challenges and problems of outsourcing services at firms that are also adopting service logic and, based on an empirical study, provides lessons regarding how they can be managed.
Design/methodology/approach – One in-depth longitudinal study of a leading systems provider has been carried out and data from between 1997 and 2003 has been utilised, consisting of 92 interviews, documents, and insider observations. Over 20 outsourcing projects were studied and the analysis was conducted both for the individual projects and across the different projects, in an iterative cycle back and forth between data on different levels and between data and theory. The aim was to search for patterns in the observed processes and glean lessons related to the outsourcing of services on an organisational level.
Findings – Based on a literature review, three outsourcing challenges and how they should be managed are presented: the internal change challenge, the strategy formation challenge, and the customer-relationship challenge. Four selected project stories are then presented; illustrating empirically how the outsourcing challenges can be managed. The project stories illustrate how difficult it can be to select a detailed sourcing strategy and implement it in a linear fashion.
Practical implications – Three main lessons learned during the research are described. First, the change process should be iterative and interactive. Second, all outsourcing and partnering initiatives should be coordinated. Third, the customer-relationship should be nurtured during the outsourcing process.
Originality/value – An unusual in-depth study of the process and challenges of outsourcing product services at an industrial firm; providing rich illustrations and empirically-based advice regarding how the challenges of outsourcing can be managed.
2006. Vol. 27, no 4, 296-315 p.
Change management, Industrial services, Outsourcing, Services, Strategic alliances