Advanced Outsourcing Practice Technology,WorkandGlobalization The Technology, Work and Globalization series was developed to provide policy makers, workers,managers,academics,andstudentswithadeeperunderstandingofthecomplex interlinks and influences between technological developments, including information andcommunicationtechnologies,workorganizations,andpatternsofglobalization.The mission of the series is to disseminate rich knowledge based on deep research about relevantissuessurroundingtheglobalizationofworkthatisspawnedbytechnology. Alsointheseries: MaryC.LacityandLeslieP.Willcocks ADVANCEDOUTSOURCINGPRACTICE CarstenSørensen ENTERPRISEMOBILITY TinyTechnologywithGlobalImpactonWork LeslieP.WillcocksandMaryC.Lacity GLOBALSOURCINGOFBUSINESSANDITSERVICES FrancescoContiniandGiovanFrancescoLanzara ICTANDINNOVATIONINTHEPUBLICSECTOR NikiPanteliandMikeChaisson EXPLORINGVIRTUALITYWITHINANDBEYONDORGANIZATIOINS JuliaKotlarsky,IlanOshri,andPaulC.vanFenema KNOWLEDGEPROCESSESINGLOBALLYDISTRIBUTEDCONTEXTS EdgarWhitleyandIanHosein GLOBALCHALLENGESFORIDENTITYPOLICIES ShirinMadon E-GOVERNANCEFORDEVELOPMENT AFocusonRuralIndia MaryC.LacityandJosephW.Rottman OFFSHOREOUTSOURCINGOFITWORK IlanOshri,JuliaKotlarsy,andLeslieP.Willcocks OUTSOURCINGGLOBALSERVICES Knowledge,InnovationandSocialCapital ChrisanthiAvgerou,GiovanFrancescoLanzara,andLeslieWilcocks BRICOLAGE,CAREANDINFORMATION ShirinMadon E-GOVERNANCEFORDEVELOPMENT MaryC.Lacity,LeslieP.Willcocks,andYingqinZheng CHINA’SEMERGINGOUTSOURCINGCAPABILITIES JannisKallinikos GOVERNINGTHROUGHTECHNOLOGY InformationNetsandSocialPractice LeslieP.Willcocks,SaraCullen,andAndrewCraig THEOUTSOURCINGENTERPRISE FromCostManagementtoCollaborativeInnovation SjaakBrinkkemperandSlingerJansen COLLABORATIONINOUTSOURCING AJourneytoQuality Advanced Outsourcing Practice Rethinking ITO, BPO and Cloud Services Mary C. Lacity UniversityofMissouri,St.Louis,USA and Leslie P. Willcocks LondonSchoolofEconomicsandPoliticalScience,London,UK Palgrave macmillan Selectionandeditorialcontent©MaryC.LacityandLeslieP.Willcocks2012 Foreword©MichaelJ.Salvino2012 Individualchapters©thecontributors2012 Softcoverreprintofthehardcover1stedition2012978-1-137-00557-1 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noportionofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency, SaffronHouse,6–10KirbyStreet,LondonEC1N8TS. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorshaveassertedtheirrightstobeidentifiedastheauthorsofthis workinaccordancewiththeCopyright,DesignsandPatentsAct1988. Firstpublished2012by PALGRAVEMACMILLAN PalgraveMacmillanintheUKisanimprintofMacmillanPublishersLimited, registeredinEngland,companynumber785998,ofHoundmills,Basingstoke, HampshireRG216XS. PalgraveMacmillanintheUSisadivisionofStMartin’sPressLLC, 175FifthAvenue,NewYork,NY10010. PalgraveMacmillanistheglobalacademicimprintoftheabovecompanies andhascompaniesandrepresentativesthroughouttheworld. Palgrave®andMacmillan®areregisteredtrademarksintheUnitedStates, theUnitedKingdom,Europeandothercountries. ISBN978-1-349-66823-6 ISBN978-1-137-00558-8(eBook) DOI 10.1057/9781137005588 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources.Logging,pulpingandmanufacturing processesareexpectedtoconformtotheenvironmentalregulationsofthe countryoforigin. AcataloguerecordforthisbookisavailablefromtheBritishLibrary. AcatalogrecordforthisbookisavailablefromtheLibraryofCongress. 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 16 15 14 13 12 Contents ListofTables,Figures,andBox vii SeriesPreface ix Foreword–TimeforaRethinkbyMichaelJ.Salvino xiv Preface xxiii Acknowledgments xxix NotesonContributors xxxi 1 RobustPracticesfromTwoDecadesofITOandBPO Research 1 MaryC.Lacity,LeslieP.Willcocks,andStanSolomon 2 WhatProvidersSayaboutEstablishingtheOutsourcing Arrangement 25 MaryC.LacityandLeslieP.Willcocks 3 WhatProvidersSayaboutManagingOutsourced Services 47 LeslieP.WillcocksandMaryC.Lacity 4 CreatingSharedServicesinthePrivateandPublic Sectors 69 MaryC.Lacity 5 TheChangingRoleofClientProjectManagement 97 MaryC.LacityandJosephRottman 6 Best-of-BreedversusBundledServices 121 LeslieP.Willcocks,IlanOshri,andJohnHindle 7 RuralSourcingandImpactSourcing 143 MaryC.LacityandJosephRottman 8 ShiftingtoCloudServices:CurrentChallengesandFuture Opportunities 169 LeslieP.Willcocks,WillVenters,EdgarWhitley,andJohnHindle v vi Contents AppendixA:ResearchMethod 197 AppendixB:Glossary 205 Bibliography 217 Index 241 Tables, Figures, and Box Tables 1.1 ITOandBPOresearchtopics 2 1.2 Outsourcingdrivers 7 1.3 Outsourcingbarriers 9 1.4 Commonoutsourcingrisks 10 1.5 Client-retainedcapabilities 16 1.6 Providercapabilities 19 2.1 Thingsproviderssay 26 2.2 Contractduration 44 3.1 Ninecoreback-officecapabilities 53 3.2 Providercapabilities 60 4.1 Savingsgeneratedfromvirtualconsolidation 91 5.1 Companypseudonyms 98 5.2 Effectsofoffshoreoutsourcingonclientprojectmanagers 99 6.1 Bundledservicescontracts,2003–08 123 6.2 Tobundleornottobundleoutsourcingservices: Thedecisionmatrix 126 7.1 Overviewofproviderorganizations 147 7.2 Developinghumancapital 151 7.3 Valueproposition,services,andclients 156 7.4 Citypopulation,countypopulation,andCostofLivingIndex 164 A.1 Codingscheme 199 A.2 Offshoreoutsourcingresearchbase 201 A.3 Researchbaseusedforrural/impactsourcing 203 Figures 1.1 Determinantsofoutsourcingoutcomes 22 2.1 Outsourcinglearningcurve 29 2.2 Client’sbargainingpower 36 3.1 Outsourcingoutcomesfromclientandproviderperspective 66 4.1 Conceptualizingsharedservicesasfourchangeprograms 73 4.2 PhaseItransformationprogramsatReuters 75 4.3 PhaseIItransformationprogramsatReuters 80 4.4 Thenewfinanceoperatingmodel 81 4.5 Processanalysisattheactivitylevel 83 vii viii ListofTables,Figures,andBox 4.6 OrganizationalredesignprogramsattheStateofMissouri 88 6.1 Clientpropensitytobuybundledservices 131 6.2 Sourcingfactoranalysis 136 6.3 Developingbundledservicesclientcapabilities 140 7.1 Relationshipbetweenruralsourcingandimpactsourcing 144 7.2 Sourcingoptions 160 7.3 Evolutionofclientengagements 161 7.4 Citypopulations,countypopulations,andCostofLivingIndex 165 8.1 Cloudevaluations 176 8.2 Thefourbigmetricsforcloud 179 8.3 Cloud–Businessandproviderperspectives 182 8.4 Stratificationofthesupplyindustry 183 8.5 Innovationinthecloud 191 Box 3.1 Anoffshorecaptivecenteroffshores–Nextdoor 57 Series Preface We launched this series in 2006 to provide policy makers, workers, managers, academics,andstudentswithadeeperunderstandingofthecomplexinterlinks and influences among technological developments, including in information and communication technologies (ICT), work organizations, and globaliza- tion. We have always felt that technology is all too often positioned as the welcome driver of globalization. The popular press neatly packages technol- ogy’s influence on globalization with snappy sound bites, such as “Any work that can be digitized will be globally sourced.” Cover stories report Indians doingUStaxreturns,MoroccansdevelopingsoftwarefortheFrench,Filipinos answering UK customer service calls, and the Chinese doing everything for everybody. Most glossy cover stories assume that all globalization is progres- sive, seamless, and intractable, and leads to unmitigated good. But what we are experiencing in the twenty-first century in terms of the interrelationships between technology, work, and globalization is both profound and highly complex. The mission of this series is to disseminate rich knowledge based on deep research about relevant issues surrounding the globalization of work that is spawned by technology. To us, substantial research on globalization consid- ers multiple perspectives and levels of analyses. We seek to publish research basedonanin-depthstudyofdevelopmentsintechnology,work,andglobal- izationandtheirimpactsonandrelationshipswithindividuals,organizations, industries,andcountries.Wewelcomeperspectivesfrombusiness,economics, sociology, public policy, cultural studies, law, and other disciplines that con- template both larger trends and micro-developments from Asian, African, Australian, and Latin American, as well as North American and European viewpoints. Asofthiswriting,wehave14bookspublishedorundercontract.Thesebooks areintroducedbelow. 1. Global Sourcing of Business and IT Services by Leslie P. Willcocks and Mary C. Lacity is the first book in the series. The book is based on over 1000 interviewswithclients,providers,andadvisorsand15yearsofstudy.The specific focus is on developments in outsourcing, offshoring, and mixed sourcing practices from client and provider perspectives in a globalizing world.Wefoundmanyorganizationsstruggling.Wealsofoundsomeorga- nizationsadeptlycreatingglobalsourcingnetworksthatareagile,effective, and cost-efficient. But they did so only after a tremendous amount of ix