Strategic governance and risk-management of the outsourcing ecosystem:developing dynamic capabilities and addressing implementation challenges

Abstract

As outsourcing continues to grow in large global organisations, governance and risk management of the related outsourcing ecosystem is evolving as a strategic Board-level activity, driving competitive advantage and value-creation, in addition to value-protection. Amidst this growth and evolution, the outsourcing of Information Technology (IT) and IT-enabled Business Process Outsourcing (BPO) continues to mature into a broader category referred to by contemporary researchers as “business services” including almost every service that can be delivered by third parties, often enabled by digitisation and technology. Through such strategic initiatives, focused on creating inimitable competitive advantage and organisational value, organisations have increased their levels of dependence on outsourcing, exposing themselves to newer risks amid shifting business environments. But despite these developments, there has been limited research on the ability of organisations to manage risks around outsourcing with a dynamic mind-set to create and protect value for organisations. Instead, most research continues to focus exclusively on preventing “bad things happening”. The first part of the research establishes the context by providing a forward-looking multi-disciplinary view on strategic risk and governance related to outsourcing. This is followed by gaining an understanding of how and why large global organisations are broadening their perspective and enhancing maturity over governance and risk-management around their outsourcing ecosystem, including capabilities that they must develop to emerge as astute decision-makers, using industry-specific case studies. The second part of the research uses primary data to capture the overall progress made in achieving this transformation and implementation challenges. This thesis contributes to the growing body of outsourcing literature by focusing on governance from a novel “outsourcing ecosystem” perspective. It also makes practical contributions by identifying and addressing implementation challenges relevant to this transformational thinking, together with a 2x2 framework, which hold relevance for organisations operating with a significant outsourcing ecosystem and their leadership.