Abstract
This research examines the impact of IT outsourcing on Restaurants’ Operations within the United Kingdom (UK). The study employs the theory of Transaction Cost Economics (TCE) and Resource-Based View (RBV) to conceptualise a theoretical framework. Data for the study was collected from 100 respondents consisting of supply chain managers, IT managers and senior management team members from three Restaurant Operations in the UK. The respondents were purposively sampled in order to ensure that only staffs with the relevant knowledge were contacted. A case study research design was adopted. Data was then analysed using both qualitative and quantitative techniques. The study established that increase in operational efficiency and cost reduction are recorded as benefits in IT outsourcing; companies have not experienced any serious post-contractual problems because they take the necessary safeguards to ensure that success is achieved in contracts; decision making is also the prerogative of top management and companies still talk about ‘giving out non-core functions in order to concentrate on core competencies’ without giving the necessary attention to other costs associated with the process. It was therefore recommended that due diligence and critical thinking have to be done by all stakeholders to be able to avert and manage any challenge that may occur in the process of outsourcing in restaurants’ operations.
Highlights
It is believed that the trend of IT outsourcing for the past two decades has been prompted by improvements in technologies, advance management tools, and increasing flexibility in requirements from buyers of many organisations (Kagalwala and Tisnovsky, 2006)
This study has shown that outsourcing contract supports the variables of asset specificity and uncertainty
The sample companies interviewed indicated that ex ante contractual precautions can avert ex post contractual problems such as hold-up and opportunism
Summary
It is believed that the trend of IT outsourcing for the past two decades has been prompted by improvements in technologies, advance management tools, and increasing flexibility in requirements from buyers of many organisations (Kagalwala and Tisnovsky, 2006). It is not surprising that majority of companies have resorted to giving out the management of their data to third party service providers with the aim of achieving efficient, cost-effective and expert solution and the need to meet the demands of system implementation, maintenance, security and operations. In an attempt to ameliorate the effect of the critical operations problems and difficulties being faced by companies, some of them are considering putting their responsibility to IT service providers. It has been revealed by some financial experts that IT outsourcing has become a practice in which a company uses an outside service provider to arrive at better business decision (Ray and Ramaswamy, 2007). This study seeks to unravel the reasons behind the rapid adoption of outsourcing policy and its attendant problems in general in the restaurant industry in the UK in connection to the theories mentioned earlier
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