Articles Tagged: critically

Vygotsky’s original ideas on the relationship between child development and learning, leading to his concept of the ‘zone of proximal development’, have become hugely influential in education and teaching practice, spawning much research in this field in recent years.  It is important firstly, to situate Vygotsky’s work alongside that of Piaget, whose theories have underpinned much of educational thinking and practice for many decades.  The concept of the zone of proximal development (ZPD) has opened up many new ideas, not only about the nature of child development itself, but also about how children may be helped to learn more effectively within the classroom context.  Researchers have studied work within the ZPD from a variety of perspectives and there are clearly contrasting views, emanating from Vygotsky’s work, about the nature of children’s learning and how it might best be enhanced through the interrelationships between children and adults and children and their peers. 

Science fiction and horror have always been used as a vehicle with which deconstruct notions of the body and its place in the process of Othering (Badley, 1995; Linton, 1999 etc.). From Shelley’s Frankenstein (1994) to the Terminator films, these genres have constantly made use of what Derrida in Of Grammatology (1997) termed La Brisure (Derrida, 1997: 65) or the hinge through which a discourse enfolds and becomes internally unstable. Frankenstein’s creation, for instance, allows deconstruction of the logocentric binary of life and death, existing as it does as dead flesh imbued with an artificial life and the Terminator films offer us similar tools with which to examine the notion of the human and the machine.

The impact of globalization on cultural identities has traditionally been viewed as negative. From this perspective cultural identity has been deemed a victim of a homogonous, Western, consumer culture. This is perpetuated and given some credence by the fact that the world political economy is the historical outcome of the combination of different colonisation objectives and local systems forming the basis for further political, economic and social systems.

Executive Summary

Outsourcing has largely been viewed from an economic perspective. It is  one of the strategic management options of different businesses nowadays which has created a lot of issues and controversies. In the UK, outsourcing has been widely practiced by business organisations in order to settle some management and economic issues, simplify their business operations, and take advantage of available external resources such as IT skills. Outsourcing has contributed a lot to the growth UK industries and has created a new area for fulfilling business goals and needs. Among the conclusions and recommendations of the study are the following:

1.    UK businesses in general are keenly aware of the competitive and volatile nature of their industry.
2.    There are two sides to the outsourcing story. Those who are in favor of outsourcing are finding it easier to find the right materials, strategies, and resources needed to run their business. Those who are against it are mainly concerned with the economic implications related to job losses and perenial transfer of ownership of resources to other countries.
3.    India is favored by UK businesses because of its measured advantages over other countries competing for outsourcing contracts. It is recommended by the study that there should be other alternatives in choosing outsourcing locations in order to minize certain economic and political risks.
4.    UK IT professionals are being challenged to try new approaches to managing their skills and talents in order to stay competitive and marketable.
5.    Legislation and protectionist policies are being called for nowadays to promote UK outsourcing companies and protect the general economic interest of UK industries.
6.    Europe accounts for almost half of all outsourcing contracts for the past years and the UK accounts for a big  chunk of the outsourcing deals in Europe.
7.    A big chunk of outsourced functions comes from IT –related functions and processes.

Preface:

    The study about outsourcing is has presented a lot of opportunities to examine the true facts and nature of this new way to management a business. >From a technical point of view, outsourcing highlights the role of information, knowledge, and technology in the different outsourcing activities. From an economic perspective, outsourcing emphasizes the effectiveness of transferring functions to maximize costs and provide other opportunities to do business. >From a social point of view, outsourcing may be seen as a trend that could influence the way organisations treat and regard each other. From a moral outlook,  outsourcing generates a lot of controversies and moral issues.

1.    Introduction:

    It is typical for organisations of today to think of reinventing themselves and their strategies to match the conditions of their environment. It is strange but not surprising that developed countries are looking outward and are seeing more and more opportunities for business expansions and strategic management innovations to other less-developed countries.
    In recent years, technology has altered the way organisations manage and perform their functions. It also has provided a lot of opportunities for expansions and innovations especially with regards to the performance of certain functions within the organisation.
    Organisations typically respond to the challenges of new technologies, new competitors, new markets, and demands for greater performance with various programs, each designed to overcome obstacles and enhance business performance (Harvard).  The demand for change cannot be disregarded if organisations are to survive. Different management strategies may be explored, products and services may need some form of innovations, total quality management can be introduced, and business process reengineering may take place and form part of the change strategy that organisations may adopt.
    Businesses today are given several options to take in order to stay competitive. They can either stick their mind to traditional methods of managing and protecting their business processes in-house or they can let the experts handle the jobs for them.  Some organisations can delegate some of these functions not only to individuals but to highly specialised and lean organisations. This change of management strategy sometimes can lead to a better performance and economic prosperity or it can also lead to loss of profit to total failure and disaster.
    In today’s highly competitive business landscape, most of the concerns of managers and company executives are to minimize spending especially with regards to handling costs associated with IT applications and functions. Often, these IT spending are centered on paying for the salaries of the IT staff and their continued training, acquisition and development of software packages and hardware equipments, and other costs associated with maintaining and handling information and communication technology or ICT.
    Spinning off business function, services, and IT applications to third-party entities may sound new but the concept itself may be old.      According to the Department of Information Resources in Texas (1998), outsourcing was primarily used to contract for data center services and facilities management, as external vendors provided economies of scale for mainframe use. It was in the 1980s that outsourcing expanded to include the goal of using only external resources, and services to develop and manage all IT activities. During those times, the cost of owning IT equipments and services is cost-prohibitive. Only those who are financially capable of investing in IT were in a better position to take advantage of information technology methods and skills.
    Outsourcing as an alternative for today’s businesses has become a standard feature in the modern organisation. Often, moves to integrate outsourcing within the overall strategic management of an organisation can be highly controversial. Researchers on outsourcing may tend to favor the use of it because of the perceived and actual benefits. Others are not so sure yet of its long term effects.
According to Dwyner and Tanner (1999, p.76), outsourcing is the process of finding another organisation to supply the buying organisation with a product or service, usually one that was previously created in-house. Outsourcing is a strategic trend, caused in part by a trend in strategy where companies focus on their core businesses. 
    Although most outsourcing issues are centered on transferring management and handling of technology to highly specialized organisations, it often involves other departments and offices like human resources. Considerations with regards to people management issues add complexity to the entire outsourcing landscape.
    It is important to consider both sides of the outsourcing business. It may be a boon to countries that host outsourced services but it can also be a bane to affected business and industries. 
    Today, the viability of engaging the services of service providers is in question and the financial stability of these providers is even more uncertain. Enterprise IT and network managers have less flexibility-and less willingness-to take a change on a different type of service (Wilson). Usually, there are different business practices of these providers that are being called into question.
    The UK industry is particularly immersed into the outsourcing phenomena that economic projections and forecasts have always taken the economic value that outsourcing can contribute to the UK economy while counting out job losses and cries for a more balanced approach to outsourcing.  For UK industries, the risk of failure from outsourcing most of their business operations is always stabilised by its long term benefits. 
UK outsourcing companies are also competing for outsourcing market shares. Fielding (2003) says that there are calls from IT suppliers and customer for the UK government to promote the benefits of outsourcing to employees in order to help UK outsourcing companies compete with offshore outsourcing giants. Calls for some protectionist policies from different sectors affected by outsourcing highlights the major impact of outsourcing to almost every aspect of economic activity in the UK.

2.    Aim and Objectives

    Different businesses in different industries in the United Kingdom have varying degrees of understanding, perception, and outlook on outsourcing and its positive and negative effects. The primary aim of this study is to be able to make a critical evaluation on the relevance of outsourcing and its corresponding effects to UK industries and the UK market in general.
    Furthermore, in coming up with the measurable outcome for this study, the objectives set forth are the following:
1.    To be able to present a general outlook of outsourcing from different industries in the UK.

2.    To be able to present different arguments of issues that are in favor or are against outsourcing in general.


3.    To be able to come up with some relevant comparisons of collected outsourcing data coming from Europe, the UK, and other continents.


PART TWO

3.     Literature Review

This study is heavily dependent on existing outsourcing studies and surveys. This implies that most of the text and studies were mostly taken from the Internet where these types of information are posted and ready to be downloaded.
    The study of outsourcing has been going on since its inception in the early 1990s.  Its development and progress in the business has been astounding that it continues to be seen as one of the best alternatives to cut on costs and manpower shortages. It is seen as the answer to key business process problems encountered by different organisations in the different industries around the world.

3.1     Outsourcing as a strategic management option

Outsourcing in today’s world is seen as a strategic management option and an emerging power as a business tool. 

    Outsourcing is now seen as a part of business organisation’s short and long term strategic plans. Cutting costs is not the main issue when it comes to deciding whether or not to adopt it. The decision to outsource comes from a lot of inter-related issues and factors that are seen as the solutions to management and resource problems. Outsourcing helps companies pursue their strategic objectives by allowing them to concentrate on their core business competencies and processes in order to attain certain degree of business excellence.
    The areas that are often considered for outsourcing projects are those areas which contain processes that are hard to understand and those that use unfamiliar technologies.  This strategic moves are often counterproductive. This approach tends use outsourcing as a means to avoids the problems than to face them head on.
    Still part of strategies is how to come to terms with outsourcing agreements. Writing agreements and contracts are complicated and needs a lot of expert advise and scrutiny.

3.1.1    Application Service Providers (ASPs)

    As an offshoot of outsourcing taking place everywhere, a new breed of companies that highly specialize in providing offshore and sometimes, nearshore IT applications and software services emerged. Application Service Providers or ASPs are companies hired to provide application access over the Internet to other organisations. This kind of arrangement enables organisations to access essential applications without the expense and burden of owning and operating assets required to run these applications (Bielec and Biros). Outsourcing applications to ASPs in general describes a generic approach to hosting software applications.  According to the Butler Group, ASP concepts encompass broad range of activities, standards, and technologies, which when deployed appropriately, delivery solutions that are genuinely enterprise-based.
    Smail sees application hosting as proving to be very valuable among mid-sized enterprises seeking to compete directly with the largest, most well-funded IT organisations. ASPs are opening the door to a pure-services sale of applications, integration, platforms, and communications. Using application service providers for hosting outsourcing services gives the different organisations equal chances and access to the same quality of IT services currently available in the market.
    While ASPs provide the best services available to their clients, the success of the entire setup cannot always be guaranteed by one party alone. The established relationship does not usually last long as there are abrupt changes that can disrupt the status quo. Both parties involved in the ASP-enabled relationship are sometimes at a loss on how to deal with contingencies, escalation procedures, and the conditions for services availability. In a world where technology constantly changes, establishing firm and long relationships cannot always be guaranteed.
    Chen and Hubbard developed the capability and value matrix which is designed to analyze whether business applications and functions can be outsourced or retained. Usually, applications which are critical to the company whether they are their core or non-core competencies are outsourced to third-party firms who are entrusted to perform better than the organisation itself. Most non-core competencies and functions of organisations, whether they are strategic or mission critical are always outsourced. Similarly, applications of the same nature are either re-tooled or outsourced just the same.

3.1.2    Advantages and disadvantages of outsourcing in general

    Companies outsource because they tend to achieve financial savings by cutting production, operational, and maintenance costs. According to Progent, whether outsourcing involves letting other specialized organisations to design network infrastructures, set up a help desk, roll out a new email system, or build on-line system applications, it can contain costs and risk. 
    Outsourcing provides organisations with technical abilities and capabilities without the need to invest heavily on technical and manpower resources. It also provides organisations the right combination of people and processes to operate effectively in the global marketplace.

3.1.3     Outsourcing Opportunities

    From a global perspective, there are various opportunities for tapping into manpower skills from different countries around the world.  Countries are provided with the needed employment and investment opportunities. Companies who outsource are given time and opportunities to focus on their core competencies and expertise.
    There is no doubt about the possible job repercussions of outsourcing.  There are reports of IT job losses and outsourcing trends have been blamed for these events. While management typically decides to outsource for various reasons, the primary reason is to cut costs and reduce management and operational problems to more manageable levels.  Management may also decide to outsource in order to take advantage of cheap but quality manpower skills available somewhere.  All of these factors greatly contribute to the uneasiness and loss of job security of IT and non IT-related jobs.
    As businesses continue to reevaluate their, efficiencies, and core competencies, outsourcing is also continuing to influence their overall corporate strategies. According to a survey made by Accenture, many Fortune 1000 human resources (HR) departments are outsourcing a large portion of their functions and activities to third-party firms that can be capable of performing their jobs (Wilson). Accordingly, two or more than two thirds of large U.S. corporations have already outsourced five or more of their HR functions to these firms. Some 70% of US companies surveyed have outsourced their health benefits management functions and 69% of these respondents are also outsourcing their pension plans. 
   

3.1.4    Managing and Evaluating Outsourcing Contracts

    It is important for organisations to understand that processes that need to be outsourced because it is not properly understood will often fail (Department of Information Resources). This is because processes that are outsourced still need to be managed in-house and that the kind of  management participation of the organisation is even greater and more complex.
    There are several essential issues in the course of managing and evaluating the outsourcing activity.
1.    Organisations that outsource their business processes should also have in-house resources to manage the outsourcing contract. Although outsourcing is one of the leading cause of job losses, organisations still need some of the same manpower skills in the outsourced business processes who will handle the management and coordination within the company.
2.    It is important that the oversight of any outsourcing contract requires that there are should be sufficient control meachanism and consistent means of communication to be established so that escalation procedures and conflict resolutions can be acted upon immediately.
3.    Legal counsels and skilled staff are still required to be able to properly diagnose and identify sources of  legal conflicts and technical problems.
4.    There is no such thing as a permanent relationship in any outsourcing deals. Organisations that are locked into one company will lose their negotiating power. There will come a point in time when the outsourcing contract will come to an end. In this case, planning for an exit strategy in cases of unexpected termination of the contract or in cases when the service guarantees are no longer feasible should be considered at all times.

3.2    India as an emerging IT superpower

India hosts the largest network of outsourcing organisations and holds the largest and most extensive outsourcing contracts in the world.

    India is emerging as the primary hub for information technology in the whole world. According to statistics, India ranks as one of the largest English-speaking population outside of the United States and most of its young population (55%) are opting for careers in computer and Internet-related jobs (Rescueamericanjobs). India’s IT professionals have grown exponentially due to demands for IT manpower skills.     While a large number of companies are outsourcing their IT functions and applications to Indian companies, other western and Asian companies are also establishing their presence and are actively participating in the software development market. These facts tend to support the notion that India is emerging as an IT superpower.
    The Indian IT industry is being constantly reshaped by changes in customers’ behaviors, the emergence of new areas of outsourcing opportunities, and the prospects for new entrants in the outsourcing industry.

3.3    The UK  IT Profession and Outsourcing

UK IT Professionals need a different career model based on more structured trainings and career development in order to counter the negative effects of  outsourcing.

    Huber (2004) says that in order for the UK IT workforce to retain their jobs, new approaches to developing the necessary skills would be needed.  This claim was made in a report by the British Computer Society that also said the growth of outsourcing is a reality and should serve as a challenge and an opportunity rather than solely a threat to the UK IT profession.
    Huber further add that the BCS report proposed a new career model  in which IT professionals would evolve from their technical nature to a more business environment where longevity and IT know-how can be best utilised. However, one of the main driving force behind outsourcing is that British IT professionals are expensive compared to offshore workers. Many IT professionals also lack the formal training and accreditation from the different IT industry players. Employers usually have a traditional view of IT work experience and usually, older workers are given limited employment and training opportunities. This has reinforced the view that Britain has a low regard for technical skills and generally have a lack of commercial and business approach within their IT departments. 
   

3.4    Outsourcing and the UK economy

Outsourcing has done more good than harm to the UK economy

    In the UK, demand for outsourcing has continued until the present time. For the last five years, it has become a normal business practice with UK companies seeking new outsourcing ways and opportunities in low-cost countries.
    According to new researches, the UK represented over 37% of the market for major outsourcing deals awarded to different companies worldwide for the first three months of 2005. The U.S followed closely at 25% and Asia Pacific countries at 4% (Kirby, 2004).
    Outsourcing has generally been viewed by businesses as good to the UK economy. They still have to see the negative impact of outsourcing sans the increasing number of jobs transferred or lost in the process.

4.     Proposed Research Methodology

    This study was a descriptive research because it is concerned with conditions and relationships that exists, practices that prevails; beliefs and effects that are being felt or trends that are developing; and processes that are on-going. It was a descriptive-survey approach because it signifies the gathering of data regarding present conditions. A survey is useful in: (1) Proving the value of facts, and (2) focusing attention on the most important things to be reported. This approach was also chosen because of the object of any class vary among themselves and the researcher is interested in knowing the extent to which different business conditions affect the decision to outsource or not.

4.1     The Questionnaire

    The researcher used a questionnaire as his measuring instrument in gathering and collecting supplemental data. This instrument helped the researcher in quantifying the results of the survey. The is questionnaire semi-structured in nature. It should be because the different questions are inter-related with each other. Follow up queries and other questions can be answered once other items are answered. 
    There were a total of 8 respondents out of 13 business managers all in all who returned the attached questionnaires through email. The distribution of questionnaires through the use of electronic-mail correspondences enabled the researcher to reach out to different organisations without encountering geographical and physical limitations. It also gave the respondents more time and space to think and reflect on their answers. This study further assumed that the answers of these respondents reflected the general view of their organisation and the value of their answers to the different questions are undoubtedly significant in quality, not in quantity.
    No specific industries were chosen for this study. The sample respondents were chosen at random. Because the study is about the effects of outsourcing in the UK industries and the UK market in general, it should be able to provide both sides of outsourcing arguments from varying industry sources.  Most of the individual questions were patterned after some surveys.
    The questionnaire was divided into three parts. The first part asked questions about the level of awareness of the different business people on the possible effects and consequences of outsourcing when viewed from a business and personal perspective. The questions asked were in relation to the following issues:
1.    How they view and regard the competitiveness of their industry today. This was included in the research because it would help establish some form of relationship between the rate of outsourcing decision in UK industries and the nature and level of competition among industry players.
2.    How they rate the ongoing trend and effects of outsourcing in their industry. This was included in the survey question because the study would like to know the level of outsourcing awareness of business people which is going on in their industry and help establish how this awareness is being looked at as one of the source of competitive advantages.
3.    What principles of outsourcing are the driving forces behind their decision to outsource or not. Businesses do not just go into outsourcing without considering some issues which might affect their overall business strategy. This was included in the study because data taken from this survey would form part of the critical analysis on the effects of outsourcing.
4.    What general areas of the industry functions are the most actively outsourced. This question was included in the study because there are specific areas of the outsourcing industry that has been widely explored and extensively included in outsourcing. Among these is in the IT and their related products and services.
5.    What countries are primarily considered by the industry for outsourcing? In effect, this question would like to know which countries are perceived to be credible and viable for UK companies and why it is so.
6.    What issues justify the decision to outsource. This question generally answers the question of why companies go into outsourcing. Although companies have a lot of reasons why they go into outsourcing, this question would somehow give the general sentiment of why outsourcing has been very attractive to UK industries.
7.    What issues are to be considered prior to outsourcing. Aside from knowing the justifications behind outsourcing, this question would like to dig deeper into specific details and emerging problems that have to be brought out in general on why outsourcing  is the solution to their problems.
The second part asked a direct question about the current outsourcing status of their business. Those who are currently into outsourcing were asked to specify what areas of their business are currently included in the outsourcing process. They were also asked to make an evaluation of how this outsourcing process has been generally affecting their business.
Those who are not currently into outsourcing were asked questions in relation to when they would consider outsourcing and the reasons why they have not yet embraced this strategic trend.
The goal of the third part of the questionnaire was to be able to identify goals and needs of businesses and their reasons for using their internal resources.  Some of these needs center on critical business issues like access to technology and knowledge not internally available. Some organisations may need short-term services without adding up their operational costs.

4.1     Research Sources

    The study of outsourcing and how it affects UK industries and the UK market in general is a very broad area of study.  In order to get a clear view of the survey, the research methodology involves gathering data not only from questionnaires but also from market and industry analysis, results, and surveys.   
As this study is not extensively based on the answers to the  questionnaire, the analysis and evaluation made in this study involved the interpretation of the respondent’s answers to each of the questions in the questionnaire. Document analysis of market surveys and  statistical data taken from on-line sources were used to make some comparison and establish some form of relationship together with the results of the questionnaire.
    This approach is the most feasible option to make because the outsourcing landscape has many faces, many players, many models, and many approaches.

5.     Data Analysis and Evaluation

    For the data analysis and evaluation phase of this study, data collected  from the survey questionnaire and other documents were fused together and logically arranged based on the sequence of the questionnaire. The following questions and the corresponding interpretation of the results are as follows:
Part 1:
    The first part of the questionnaire would like to get some views and personal perceptions of outsourcing in general.
1.    Question: Do you regard your industry today as highly competitive and volatile?
Of the total 8 who responded to the survey, 62.5% (5) of them regarded the industry they are currently in as highly competitive and volatile. This might be true in today’s business setting because of the increasing number of new entrants in the different industries today. This perception is largely born from the fact that businesses that are currently surviving in today’s changing environments are businesses which have survived the competition. Organisations that have shown signs of complacency measure themselves against low standards and focus their attention on narrow functional goals instead of broad business opportunities provided by outsourcing (Harvard). Organisations which tend to regard industry environment as not highly competitive are not likely to focus management issues on external considerations but more on internal feedbacks from customers, suppliers, and shareholders.
2.    Question: In your own perception, what is the rate of outsourcing in your industry today?
Businesses and public sector organisations in the UK have enthusiastically embraced IT outsourcing according to Computerweekly.
Most businesses today are into outsourcing. That is according to the view of a majority of the respondents surveyed. 50% of these respondents have this belief that the business practice of outsourcing is prevalent in their industry. The results of this question are illustrated in figure 5(a)

Figure 5(a)  Perception ratings about outsourcing

3.    Question: What is the general effect of outsourcing in general in your industry today?
According to the survey, 37.5% of respondents (3 out of 8) view the effects of outsourcing as good and favorable and the same percentage of respondents still cannot see the positive or negative effects of outsourcing. Only 25% of the respondents  view outsourcing as having a negative and bad effect to the market economy of UK. Figure 5(b) illustrates the results for this question.

Figure 5(b) Effects of Outsourcing

4.    Question: From a business perspective, what are the most viable outsourcing principles which should be considered prior to outsourcing?
The survey found that companies considered outsourcing business functions that are too costly to operate and manage (26%). Another 23% considered  outsourcing operations and functions that are not readily affected by day-to-day operations. A small percentage of the respondents considered outsourcing business operations that are mission-critical and  their core competencies. Figure 5(c) shows these varying percentages.

Figure 5(c) Outsourcing principles to consider

5.    Question:  In your opinion, what is the most active area of outsourcing today?
    Most of the outsourcing functions taking place in different industry players today are  made in the area of information technology. According to the survey made, IT  is still the top area for outsourcing followed by human resource management (see figure 5(d) ).

Figure 5(d)  Most active areas of outsourcing

6.    Question: Which countries would you favor as possible offshore outsourcing locations?
    Most of  the respondents preferred India over five other Asian countries for their outsourcing projects. Table 5(a)  presents the order of preference of business people.

India    6
China    4
Philippines    3
Russia    2
Ireland    2
Singapore    2
Hongkong    1
Netherlands    1
Mexico    0
Others    0
    Table 5(a)  Ranking of  preferred outsourcing countries
    However, in the global E-readiness rankings made for the years 2004 and 2005, India is behind other Asian and European countries. A country’s E-readiness score is a measure of its e-business environment, a collection of factors that indicate how amenable a market is to Internet-based opportunities (IT facts). Table 5(b) ranks selected countries by score in two years (2004 and 2005).

Global E-readiness Rankings
Rank, 2005    Rank, 2004    Country    Score, 2005    Score, 2004
1    1    Denmark    8.74    8.28
2    6    US    8.73    8.04
3    3    Sweden    8.64    8.25
4    10    Switzerland    8.62    7.96
5    2    UK    8.54    8.27
6 (tie)    9    Hong Kong    8.32    7.97
6 (tie)    5    Finland    8.32    8.08
8    8    Netherlands    8.28    8.00
9    4    Norway    8.27    8.11
10    12    Australia    8.22    7.88
11    7    Singapore    8.18    8.02
12    11    Canada    8.03    7.92
12    13    Germany    8.03    7.83
14    12    Austria    8.01    7.68
15    16    Ireland    7.98    7.45
16    19    New Zealand    7.82    7.33
17    17    Belgium    7.71    7.41
18    14    S. Korea    7.66    7.73
19    18    France    7.61    7.34
20    22    Israel    7.45    7.06
21    25    Japan    7.42    6.86
22    20    Taiwan    7.13    7.32
23    21    Spain    7.08    7.20
24    23    Italy    6.95    7.05
25    24    Portugal    6.90    7.01
26    26    Estonia    6.32    6.54
27    31    Slovenia    6.22    6.06
28    27 (tie)    Greece    6.19    6.47
29    27 (tie)    Czech Republic    6.09    6.47
30    30    Hungary    6.07    6.22
31    29    Chile    5.97    6.35
32 (tie)    36    Poland    5.53    5.41
32 (tie)    32     South Africa    5.53    5.79
34    39 (tie)    Slovakia    5.51    5.33
35    33    Malaysia    5.43    5.61
36    39 (tie)    Mexico    5.21    5.33
37    34    Latvia    5.11    5.60
38    35    Brazil    5.07    5.56
39    37    Argentina    5.05    5.38
40    38    Lithuania    5.04    5.35
41    n/a    Jamaica    4.82    n/a
42    42    Bulgaria    4.68    4.71
43    45    Turkey    4.58    4.51
44    43    Thailand    4.56    4.69
45    44    Venezuela    4.53    4.53
46    48    Saudi Arabia    4.38    4.38
47    50    Romania    4.19    4.23
48    41    Colombia    4.18    4.76
49    46    India    4.17    4.45
50    47    Peru    4.07    4.44
51    49    Philippines    4.03    4.35
52    55    Russia    3.98    3.74
53    51    Egypt    3.90    4.08
54    52 (tie)    China    3.85    3.96
55    56    Ecuador    3.83    3.70
56    52 (tie)    Sri Lanka    3.80    3.96
57    54    Ukraine    3.51    3.79
58    58    Nigeria    3.46    3.44
59    57    Iran    3.08    3.68
60    59    Indonesia    3.07    3.39
61    60    Vietnam    3.06    3.35
62    63    Kazakhstan    2.97    2.60
63    61    Algeria    2.94    2.63
64    62    Pakistan    2.93    2.61
65    64    Azerbaijan    2.72    2.43
Source: IBM, Economist
Table 5(b)  E-Readiness ranking of countries
7.    Question: In your opinion, what is the primary issue which generally justifies outsourcing?
Most of the respondents (50%) said that the high cost of labour is the primary reason they shift their business functions in order to take advantage of low-cost  and skilled labour force of other countries. Figure 5(e) graphically illustrates this point made.

Figure 5(e) Issues that justify outsourcing

Part 2:
1.    Question: Does your organisation currently outsource part or most of your business functions?
62.5% (5 out of 8) of the respondents said that they are currently into outsourcing.  In this context, outsourcing is understood to be using external resources and services to augment or transfer some or most of the organisations’ business functions (figure 5(f) ).

Figure 5(f) Options to outsource or not
2.1  What areas of your business are currently outsourced?
    IT related functions and services are the most  outsourced  items in this study. Almost 40% of all outsourced functions are IT functions followed closely by financial and sales transactions at 27% (figure 5(g) ).  

Figure 5(g) Business areas often outsourced

    Almost 40% of  the top 500 Fortune companies listed are into outsourcing. Most of these companies are related to IT (i.e. GE, Lucent, Oracle, Microsoft). IT still leads as the most active area of outsourcing as shown in figure 5(h).

Figure 5(h) Active areas of outsourcing (Source:Computerweekly)

2.2  Question: How has outsourcing affected your business standing in general?
    Most of the respondents who are into outsourcing generally have a positive view of  outsourcing (37%). There are still businesses however, who still have to see whether outsourcing has been beneficial or not to their business in general (figure 5(i)). 

Figure 5(i) Effects of outsourcing to businesses
2.3  How has the outsourcing strategy been met by the organisation?
    It is typical for organisations to view change as something that should be carefully weighed and studied from a lot of perspectives. Based on the results, business  who are into outsourcing  had varying degrees and mixed reactions. This is interpreted to mean that management was able to make the correct approach in informing their employees on the positive and negative effects of outsourcing and its possible consequences and risks (figure 5.(j) ).

Figure 5(j) Organisations’  reaction to outsourcing
3.1 Question: Does your organisation have plans of  transferring some or most of your business functions to offshore service providers in the form of outsourcing?
    Out of the three business that opted not to join the outsourcing bandwagon, two are seriously considering outsourcing some of their functions within the next 12 to 24 months (figure 5(k) ). Could this be an indication of  how businesses are currently viewing the positive effects of outsourcing to their business? Or could this be an indication that businesses are still studying the outsourcing trend within the next 12 to 24 months?

Figure 5(k) Outsourcing  plan timeframes

3.2    What are the reasons why your organisation has not yet engaged in outsourcing?

    Of the three businesses that are not into outsourcing, 34% (1 out of 3) of the respondents said they have not yet fully understood and recognised the benefits of outsourcing. One organisation cited no foreseeable benefits while another said that the current reengineering process  has not allowed any room yet for outsourcing to take place.

Part 3:
    The third part of the questionnaire was able to come up with the goals and needs of organisations which can be addressed by outsourcing.
    Most of the respondents  said that the reasons to use external resources are based on the need to provide the organisation with short-term services without adding ongoing operational costs and to focus internal IT resources on core strategic plans and projects.  Most businesses also value their ownership and control over their human resources. This implies that companies who are not into outsourcing still have reservations about letting go of their valuable assets (personnel  and human resources).

5.1  Analysis and Discussion

5.1.1    Outsourcing as a strategic management option

Outsourcing is not  as simple as it may seem to be. Although a lot of companies are into already outsourcing, companies need to consider all of the key issues that surround this new business strategy. Kirby (2004) says outsourcing, especially when it involves buying stakes in an offshore supplier will invite conflicts in managerial styles and strategies. Companies that outsource should have very good management structures and a highly developed styles of communication. Organisations should be able to prove to themselves that they are in control of their assets and their data. It is typically complex to outsource a major part of their business if organisations cannot demonstrate their ability to have all the necessary controls in place.
     Outsourcing is about efficiency. Those who argue against outsourcing are primarily concerned with the job security and  loss of other business opportunities. Banking giant HSBC will close down five back-office processing centers around the UK by the end of 2005 and move 4,000 of these jobs to India, Malaysia, and China over the next two and a half years (Fielding, 2003). Strategies such as these are agitating and enraging unions which have largely taken the fight for job security to new heights. The results of the survey show that outsourcing allows management to leverage resources beyond their capabilities. Since most of the outsourced functions are related to technology, it implies that the primary motivation for outsourcing is to save on costs. Capital investments in new technologies and overhead costs in training and staffing are proving to be a burden to organisations nowadays. IT is just a part of their internal business function that supports their core functions.  If organisations are highly specialized in their core competencies, then the business option for them is to maintain their competitive advantage and let other experts do the other ‘side’ jobs for them.

5.1.2    India as an emerging IT superpower

    India currently leads the world IT resources. According to the survey made for this study, India is the top outsourcing location for business organisations at present. It is favored over other nations due to a variety of advantages it enjoys. Its economy is in the upswing. Its IT infrastructure is constantly being developed and reshaped specifically for accommodating outsourcing contracts. The country is slowly becoming competitive in almost all fronts of the world. According to Computerweekly (2004), recent research conducted among UK senior management responsible for offshore outsourcing decisions found that 60% see the large Indian outsourcing providers as offering a service that are equally competitive as that of other western and other Asian suppliers.
    China and the Philippines are slowly catching up and eating up some portions of India’s outsourcing market share. The Philippines is well known for semiconductor products from IT giants such as Intel and Motorola. Its education system is similar to that of the United States and other European countries. It has been quite successful in the call center outsourcing industry. China is the most serious competitor to India. Many Indian companies have started to setup outsourcing businesses in China largely because of government initiatives. China and the Philippines have a sizeable talent pool which could meet world standards in terms of skills and efficiency.

5.1.3    New approaches to UK IT Professionals

    According to Computerweekly, by the year 2015, the UK will transfer 150,000  IT jobs and 100,000 IT-oriented clerical jobs offshore. If non-IT related jobs are included in the forecast, the total number of UK jobs that will be lost to outsourcing will rise to 760,000, equivalent to 3% of the entire UK workforce.
    In reality, there is really no shortage of  IT manpower in the labour market. In fact, calls are being made to introduce new training strategies to UK IT professionals that would include the development of their business and management skills in addition to their technical skills. This would make them equally effective on the business front. Constant learning, re-skilling and redeployment are some of the concerns that also need to be prioritized by the government (Fielding, 2003). Another set of calls are being made to encourage the UK government to promote the benefits of outsourcing within the UK so as to help UK outsourcing companies compete with their overseas rivals.
There are moves to call the attention of legislators for the introduction of certain legislations that would address the widespread concerns from IT professionals about the implications of being transferred to an outsourcing supplier. The introduction of this kind of  protectionist policies however,  would harm UK industries that are already heavily dependent on outsourcing and also those engaged in the export and import business. The fact is, protectionism is isolationism and has a history of past failures (Kane et al, 2004). The principle of economic freedom is the cornerstone of economic growth and prosperity. National Outsourcing Association (NOA) chairman Nigel Roxburgh was quoted by Fielding (2003) as saying that embracing the trend towards outsourcing, rather than introducing protectionist measures would be the key to a thriving UK economy.

5.1.4    Effects  of Outsourcing in the UK economy at present and the future

    A report by Forrester  Research (Computerweekly) predicted that the UK will lead the growth in offshore outsourcing across Europe over the next 10 years. According to Booth (2005), the foremost area of concern for UK IT directors in 2005 is uncertainty in the business environment.  This uncertainty has prompted different unions around the UK to call on the government to setup an independent commission to examine the likely effects of outsourcing on the economy and the levels of unemployment (Fielding, 2003). While outsourcing has generally allowed the UK industry to concentrate on their core competencies and  specialisations, it has also provoked calls for new sets of regulations and safeguards to the economy. Although there was no noted increase in previous “boom and bust” cycles in relation to the DOT com burst of the 1990s, the UK economy expects to have a soft landing generated by the high degree of dependencies of UK companies to outsourcing (Booth, 2005). 
    Europe has accounted for almost half of the total outsourcing contracts in the world today. This accounts to about 70% of the around £7.5 billion worth of contracts awarded. Surveys by analyst groups (Computerweekly) have regularly put the UK ahead of all the other European countries in their exposure to external resources through outsourcing. According to Dowall (2005), recent estimates by  technology and research firm Kacle  suggest that almost one fifth of public sector services worth over £60 billion could be delivered through outsourcing to private and voluntary bodies. This alone suggests the high level of confidence that the government  has on the future of outsourcing. There are moral issues and moral hazards raised however. There is a significant moral risk in public sector outsourcing in relation to intellectual property ownership and the timely delivery of these basic services.
    There are real risks to outsourcing. There is the possibility of encountering legal loopholes in outsourcing agreements. The economic risks comes from not being able to deliver the goods and not being able to pay on time.
    Major companies are reconsidering th outsourcing of functions such as those in the area of IT after the promised savings failed to be accounted for. A Deloitte Consulting survey found that there was evidence of a fundamental shift among larger companies, including some which previously overlooked the economic and business benefits  of outsourcing  (AFX UK Focus, 2005).
    Poorly defined business goals and requirements and a poorly constructed service level agreement are some of the top reasons for IT outsourcing failures. Too often, companies and their outsourcing partners are in a hurry to construct service agreements and contracts without considering other factors.
    The success or failure of any outsourcing venture depends on how businesses recognize and deal with strategic issues facing today’s business organisations, customers, and suppliers. Economies of scale cannot be achieved if the sole purpose of outsourcing is to cut on costs.

5.2    Conclusions and Recommendations:

The outsourcing trend has not only produced tangible and intangile economic and management benefits. It has also spawned a lot of controversies that would likely generate positive and negative reviews of outsourcing in general. While studies show that outsourcing is more likely to grow over the next few years due to its popularity in today’s business management, outsourcing needs to be carefully planned and  studied thoroughly for its short and long term effects. Concerns are more likely to come from the need to take advantage of available offshore resources in order to fulfill the needs and goals of business organisations. Job security has a new meaning in the outsourcing world. Outsourcing has contributed to a lot of cost saving measures and also to a number of job losses and transfers. Outsourcing has affected basically all the facet of life but the impact of outsourcing as recognised by this study is more on the economic and social aspect of life in the UK.
Outsourcing in the UK has never been better. The UK is one of the leading countries around the world that exposes their business functions offshore. The economic implications can hardly be measured at this point. Although a lot of companies have been into outsourcing for a long time and reaping the benefits, a number of organisations are still unsure about its true nature. There are no clear thoughts on where and how outsourcing should be implemented in their proper context and relevance. Outsourcing is a global phenomenon and in order to make a more detailed view of  how it is currently affecting  UK industries or any other countries for that matter, studies should consider not only those engaged in outsourcing but to also consider and understand the global nature of today’s businesses.
It is important and ethical to treat and understand outsourcing issues outsourcing from all sides of the research spectrum. As technology changes, the outsourcing landscape also changes. Further studies can be made in the area of  technological, moral and social implications of outsourcing in the UK. Since outsourcing also has its negative effects on people’s lives and  the general outlook of life, further studies can be made to test the viability of moving back outsourced business functions back in-house.
As organisations continually grow and adapt to new environments, new opportunities for outsourcing are also developing. Less developed countries are slowly introducing reforms and instituting measures to attract outsourcing clients.  Developed countries are also stabilising their economies by engaging in offshore outsourcing. In these times of uncertainty, it is still to be known who would eventually gain from this form of relatinship.

i.     Appendices

Appendix 1:Impact of Offshore Business Processes

Appendix 2: China’s Future Strength

Hard facts about China:
•    China has the numbers and the low cost structure that India also enjoys
•    It lacks rigid enforcement of Intellectual Property Rights 
•    Suffers from language barrier
•    Major Indian companies have started looking at China to start up their own software development

Appendix 3: India’s Current Strengths

Hard IT Facts About India
•    India is expected to build a $17 Billion web industry by 2008 (source: Stylus, Aug 2004)
•    India claims to control 85% of web technologies in the market
•    55% of young Indians are opting for careers in IT and the Internet
•    India has the largest English speaking population outside of the US
•    India is the largest producer of movies in the world

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