Outsourcing Risk Research Articles

Technology-induced job loss risk, disability and all-cause mortality in Norway

BackgroundOngoing shifts in economic structure from automation and globalisation can affect employment and mortality, yet these relations are not well described.ObjectiveWe assess whether long-term employment and health outcomes relate systematically...

Воздействие валютного риска на международный аутсорсинг

The paper considers the impact of currency risk on economic systems based on international outsourcing. The theoretical basis for constructing a model of the economic system based on international outsourcing, as well as economic speculative currency risk, is presented. The authors propose and describe a model of the impact of currency risk on economic systems based on international outsourcing. Mathematical modeling, as well as mathematical and graphical analysis of indicators characterizing the impact of currency risk are carried out. The results reflecting the impact of currency risk on a particular participant of the economic system, as well as on the system as a whole, under various particular conditions, are presented. The authors point out that currency risk in economic systems based on international outsourcing is expressed, not only explicitly, but also covertly through changes in the volume of production, cost and price of final value. Based on the modeling, general and specific criteria for the qualitative assessment of currency risk in international outsourcing are proposed. The results of the study can be used by organizations that are part of economic systems based on international outsourcing, regardless of the management approach and the mechanism for forming an economic system based on international outsourcing.

Financial Outsourcing Risk Analysis from the Perspective of Service Sector

Financial outsourcing is becoming increasingly common in China's domestic market. Suffering from inadequate policy and system, relatively low management level and insufficient professional staffing, however, the market sees that management of relevant firms do not have a clear understanding risks of financial outsourcing, which easily exposes relevant firms to large potential losses. Based on the rapidly developing service industry, this paper reviews the relevant theoretical contents, focusing on risks pertaining to firm financial outsourcing. It analyzes the outsourcing risks involved, and finally proposes reasonable and feasible coping strategies for these specific risks.

A Sustainable Plan to Rescue HR from Itself

The Human Resource (HR) function is often viewed by those in organizations as a process function and a cost-center, which results in an enhanced risk of outsourcing and automation. However, HR is also uniquely positioned to engage firms in cross-functional transformational change efforts, as its work is embedded in every business function within an organization. Sustainable HR and the triple bottom line (TBL) present opportunities for HR to build a strategic role within organizations. This essay provides strategic and tactical models, with specific steps for implementation, to assist HR in re-assert its role in driving the competitiveness of the firm through Sustainable HR.

Inequality of Safety and RISK in Korea: Unstable Workers at Risk

Purpose: This paper focuses on the microscopical and qualitative evolution of the mode of capital accumulation by the capitalist system based on market expansion. It will discuss how ‘the changed’ conditions surrounding humans in 21st century capitalism are fundamentally inconsistent with the essentially ‘unchanging’ needs for human safety, and ultimately how this is regressing the discussion of human nature.To this end, this paper attempts to examine the following questions: First, who enjoy the right to security that is in touch with the essential human needs, or who are the main exposure to danger? Second,how does the inequality of wealth lead to the inequality of risk? Method: To investigate the above research questions this study focuses on the number of industrial accident deaths in Korea, which is more than twice the number of deaths from Corona 19, and analyzes who are more at risk. To this end, the Ministry of Employment and Labor s industrial accident statistics were used to analyze which workers are more exposed to risk.Based on this objective data showing the level of inequality of risk, this study tries to interpret qualitatively the fundamental reasons for it from the critical perspective of capitalistic accumulation. Results: The need for safety is an essential trait for all human beings, but it is always changed and refracted according to social and class conditions. That is, the reality proves very well that safety is commercialized and that members of society are in an unfavorable situation with regard to risk. Risk inequality is multiply structured between developed and developing countries, primary and subcontracted firms, and regular and nonregular workers. Developed countries and subcontractors are trying to pay safety costs at a lower price through outsourcing of risks rather than internal investment in safety, and in the end, it is workers engaged in unstable labor that bear this outsourcing risk. Conclusion: The intrinsic need for safety is the same for everyone and therefore for all workers.However, if safety is not distributed fairly and only some people can be exposed to danger, workers who can purchase safety based on a stable material base will want to avoid the risk as far aspossible. The veto power to avoid exposure to risk in a commodified capitalist system of safety can only be exercised on a stable material basis.On the other hand, unstable workers with weak material bases have low bargaining power to reject risks and instead have high dependence on market income. Therefore, in order to secure safety, market income must be earned even at the expense of safety rather than the ability to pay the price of safety.

The Impact of Outsourcing on the Performance of Small and Medium Enterprises in Vietnam

This study examines the impact of using outsourced services on the performance of small and medium enterprises (SMEs) in Vietnam. The primary data used to analyze this study's main objectives were collected by the survey with the structured questionnaire and the expert interview with semi-structured interview guidelines. A total of 742 SMEs using outsourced services in the study area participated in the survey. The study employs Cronbach’s alpha test, exploratory factor analysis (EFA), confirmatory factor analysis (CFA), structural equation modelling (SEM), and multiple-group analysis for variables measurements and model testing. The study also investigates the influences of the degree of outsourcing on the enterprise’s performance. The results show that the degree of outsourcing has a low impact on financial performance, particularly ROS, ROE, and ROA (R2 = 0.013). Also, the degree of outsourcing has impacts on non-financial performance. The multiple-group analysis results indicate the different influences of the outsourcing degree on the different types of enterprises’ performance. The degree of outsourcing has a stronger impact on micro-enterprises' performance than the small and medium-sized enterprises. The commercial and service enterprises have higher performance when outsourcing than others. The outsourcing degree has a stronger impact on the performance of the enterprises that operated for more than nine years than others. The results show that there are different influences of the outsourcing degree on the performance of the enterprises that have different outsourcing situations. According to the findings, this study proposes the three main managerial implications to improve outsourcing effectively, such as strengthening outsourcing risk management, deciding on outsourcing depend on the enterprises’ characteristics, and managing the relationship between stakeholders.

A fuzzy approach to assess outsourcing risks in Brazilian navy industrial military organizations

PurposeThis study assesses outsourcing risks using the fuzzy analytical hierarchy process (FAHP).Design/methodology/approachThis descriptive research combines both qualitative and quantitative approaches. Risks identified in the literature review were classified with FAHP using questionnaire data from respondents in operations, procurement and risk management in Brazilian Navy Industrial Military Organizations (OMPS-I, by its Portuguese acronym).FindingsThe results indicate that FAHP is a method capable of producing relevant information to decision-making in the risk management process. A framework was created incorporating 16 major risks related to outsourcing. The results point to higher inherent risk levels related to outsourcing in the context of OMPS-Is: in order, hidden costs and unrealized savings; loss of knowledge/skills and/or corporate memory and difficulty in reacquiring a function; and loss of opportunities and reputation. The category of economic risk was revealed as the most important.Originality/valueThis study improves understanding of outsourcing risks and improves risk assessment by refining decision-making information and developing a system of decision analysis with several criteria. It also contributes to the development and implementation of a usable version of decision analysis with several criteria at a managerial level.

Impact of Outsourcing Risk on Corporate Performance

Impact of Outsourcing Risk on Corporate Performance

ЗАСОБИ АУТСОРСИНГУ НА ПІДПРИЄМСТВАХ АГРОПРОМИСЛОВОГО БІЗНЕСУ: ДОСВІД ТА ПЕРСПЕКТИВИ ВИКОРИСТАННЯ

The article considers the development of outsourcing relations in the world, the role of outsourcing in the development of the world economy. There are some researches on this issue that describe certain aspects of the functioning of organizations that use outsourcing in their activities, which, however, without considering the industry specifics of using outsourcing. In particular, this applies to the theoretical and practical use of outsourcing in the agricultural business. Taking into account the dynamic of outsourcing development, its research requires constant scientific exploring, updating knowledge in this area, comprehensive analysis, generalization of modern outsourcing practices, and formulation of the precise scientific and practical recommendations. Outsourcing relations in the agro-industrial business of the Netherlands, Great Britain, Poland and Japan are analyzed. The advantages and risks of outsourcing and selection of outsourcers to perform certain functions of the enterprise are systematized. It has been proven that companies that use only internal opportunities instead of external ones (instead of outsourcing) are less innovation-oriented and cannot take advantage of opportunities to develop new value added products. It is noted that highly specialized outsourcers can do much more to create added value at a lower cost than any integrated enterprise. There are basic criteria for choosing an outsourcer determined. The expected benefits from the use of outsourcing are singled out: savings in operating costs, reduction of investment costs, supply of fresh capital, conversion of constant value into variable, improving the quality of products and services, improving the adaptability of the enterprise, access to modern technologies, focus on key activities and solutions associated with existing features. The existence of a strong positive correlation between the level of outsourcing development and production volumes, trade volumes, employment level and innovation level has been proved. The reasons for the low level of implementation and development of outsourcing in domestic vertically integrated agricultural enterprises are identified.

A tabu search heuristic for the outsourcing risk management problem in multi-echelon supply chains

A tabu search heuristic for the outsourcing risk management problem in multi-echelon supply chains

Corona virus, tariffs, trade wars and supply chain evolutionary design

PurposeUsing the constructal law of physics this study aims to provide guidance to future scholarship on global supply chain management. Further, through two case studies the authors are developing, the authors report interview findings with two senior VPs from two multi-national corporations being disrupted by COVID-19. This study suggests how this and recent events will impact on the design of future global supply chains.Design/methodology/approachThe authors apply the constructal law to explain the recent disruptions to the global supply chain orthodoxy. Two interviews are presented from case studies the authors are developing in the USA and UK – one a multi-national automobile parts supplier and the other is a earth-moving equipment manufacture. Specifically, this is an exploratory pathway work trying to make sense of the COVID-19 pandemic and its impact on supply chain scholarship.FindingsAdopting the approach of Bejan, the authors believe that what is happening today with COVID-19 and other trade disruptions such as Brexit and the USA imposing tariffs is creating new obstacles that will redirect the future flow of supply chains.Research limitations/implicationsIt is clear that the COVID-19 response introduced a bullwhip effect in the manufacturing sector on a scale never-before seen. For scholars, the authors would suggest there are four pathway topics going forward. These topics include: the future state of global sourcing, the unique nature of a combined “demand” and “supply shortage” bullwhip effect, the resurrection of lean and local production systems and the development of risk-recovery contingency strategies to deal with pandemics.Practical implicationsSupply chain managers tend to be iterative and focused on making small and subtle changes to their current system and way of thinking, very often seeking to optimize cost or negotiate better contracts with suppliers. In the current environment, however, such activities have proved to be of little consequence compared to the massive forces of economic disruption of the past three years. Organizations that have more tightly compressed supply chains are enjoying a significant benefit during the COVID-19 crisis and are no longer being held hostage to governments of another country.Social implicationsAn implicit assumption in the press is that COVID-19 caught everyone by surprise, and that executives foolishly ignored the risks of outsourcing to China and are now paying the price. However, noted scholars and epidemiologists have been warning of the threats of pandemics since the severe acute respiratory syndrome (SARS) virus. The pundits would further posit that in their pursuit of low-cost production, global corporations made naive assumptions that nothing could disrupt them. Both the firms the authors have interviewed had to close plants to protect their workforce. It was indicated in the cases the authors are developing that it is going to take manufacturers on average one month to recover from 4–6 days of disruption. These companies employ many thousands of people, and direct and ancillary workers are now temporarily laid off and face an uncertain future as/when they will recover back to normal production.Originality/valueUsing the constructal law of physics, the authors seek to provide guidance to future scholarship on global supply chain management. Further, through two case studies, the authors provide the first insight from two senior VPs from two leading multi-national corporations in their respective sectors being disrupted by COVID-19. This study is the first indication to how this and recent disruptive events will impact on the design of future global supply chains. Unlike the generic work, which has recently appeared in HBR and Forbes, it is grounded in real operational insight.

Strategic sourcing under recall loss sharing and product quality investment

Product recall has been a widespread practical operation risk in the production outsourcing. To remit even avoid product recall risk, this paper considers a two-echelon supply chain where the original equipment manufacturer (OEM) orders a critical component from one or two contract manufacturers (CMs) and uses it to produce finished product with potential quality defect. The CMs can decide investment level to reduce defect possibility and share recall loss with the OEM once product recall is implemented. When the recall loss sharing rate is fixed, the OEM may adopt the single sourcing strategy or the dual sourcing strategy which depends on the recall loss sharing rate. Moreover, if the sharing rate is relatively small, the single sourcing strategy is an optimal choice for the OEM. However, when the recall loss sharing rate is determined by the OEM, she prefers to adopt the dual sourcing strategy. Meanwhile, an increase of the recall loss sharing rate may not force the CM to improve product quality. By the numerical analysis, if the marginal recall loss is large or the wholesale price is relatively small, the OEM and the CMs can reach a win-win scenario. Finally, we examine an extension in which the CMs have pricing ability on wholesale price, and the result shows that the OEM can not obtain a cost-reduction benefit under the dual sourcing strategy.

Risk and Benefit of Outsourcing in Southern Part of Ethiopia: A Case of MAA Garment and Textile Factory

The main objective of this study is to assess the perceived and existed benefits and problems of outsourcing on two outsourced functions of the organization. To select respondents for this study purposive sampling were used. The collected questionnaires were analyzed by using Statistical Package for the Social Sciences (SPSS) computer program. As result of the study indicated both outsourced functions brought many benefits to the organization. The most important benefits are focus on core activities, Cost and efficiency saving, continuity and risk management and operational control. Hence, the managers of the organization have gotten relief on following the routine problems which is related to noncore activities. On the contrary, the factory faces little challenges which can easily avoided, these are Loss of managerial control, Bad publicity and Tied to the financial well-being of other company.

The risk to reconstitution: supply chain risk management for the future of the US Air Force’s organic supply chain

Purpose The future retirement of US Air Force (USAF) legacy weapon systems (WSs) removes their associated funding from within the Air Force Working Capital Fund and their parts from its organic supply chain inventory. The trending outsourcing of product support to contracted logistics support and its potential long-term consequences to the USAF government-owned, government-operated, organic supply chain and the reconstitution capabilities it enables in the USAF’s organic industrial base, suggests the need to assess its risks. Although there is an existing body of research into the risks of outsourcing the USAF’s industrial repair, and federal legislation such as Core 50/50 laws enacted to institutionalize its risk management, there is comparatively little research into the outsourcing risks to the long-term viability of the supply chain on which that repair capability is dependent. The aim of this research is to fill that research gap by assessing and modeling those risks. This research concludes by providing several future research directions that may be evaluated to provide more detail. Design/methodology/approach Leveraging a conceptual model derived from research and a multi-criteria analysis framework to assess supply chain risk. Quantifying the predicted impact of retirements on funding and inventories of unique parts. Modeling the potential risk due to WS retirement. Findings Results indicated long term enterprise risks to the Air Force’s supply chain correlated to the retirement of WSs and their associated funding and spare parts inventory. Originality/value This research provides an in-depth evaluation of the USAF’s supply chain to assess the holistic risk of product support outsourcing and its long-term impacts on viability by using resource-based view and contingency theory as theoretical underpinnings. In addition, insights and implications for defense supply chain managers and decision-makers.

Two-level principal–agent model for schedule risk control of IT outsourcing project based on genetic algorithm

With increasing developments in the Information Technology (IT) outsourcing industry, many enterprises outsource IT services to reduce costs. However, the schedule risk of IT outsourcing (ITO) projects may result in enormous economic losses for an enterprise. In this paper, the principal–agent theory is used to control the schedule risk of ITO projects. A two-level mathematical model is built to describe the decision process of the client and vendors. With an increase to the number of subprojects and activities, the scale of the problem will become very large. The resulting optimization is an NP hard problem with continuous domain. Therefore, a genetic algorithm (GA) is designed to solve the proposed model. Experiments are performed to test the ability of the proposed algorithm. Some insights from simulation analysis – the principal–agent theory and two-level mathematical model – are suitable for describing the cooperative relationship between principle and agent. By comparing with ant colony optimization and simulated annealing, the proposed GA shows strong optimization abilities for convergence, reliability, and efficiency, which is a good tool for this kind of optimization problem. The near-optimal plan reduced the schedule risk of the project remarkably, which is the scientific quantitative proposal for the decision maker. This study provides practitioners insights on relationships of schedule risk and ITO projects, and the design model and algorithms of this paper provides practitioners effective potential method to reduce the schedule risk of ITO projects in their operations. However, the uncertain characteristics of key and multiple factors should be considered in future work. Stochastic Programming and the Monte Carlo Simulation Method are two potential tools for dealing with uncertain factors. Additionally, the proposed GA could potentially be improved in terms of convergence. The advantages of other intelligent algorithms could be applied to the GA in order to improve its searching ability, such as the Taboo mechanism.

Проблемы и перспективы использования аутсорсинга в органах местного самоуправления Украины

The goal – of the paper is to analyze the opportunities and risks of outsourcing in the implementation of administrative and managerial processes by local authorities of Ukraine. The analysis includes a set of guidelines for improving outsourcing at the local governmental level. Research methodology – in the paper, an analysis of regulatory documents, reports of the Association of Ukrainian Cities, the outcomes of projects for the implementation of outsourcing in local governments, and an expert survey were used. Score/results – the problems in organizing outsourcing in local governments of Ukraine are identified. The recommendations for solving those problems are developed. Originality/value – the paper is done by the authors independently without any help and assistance of others. The paper provides links to researches, as well as links to legislation. The nature of the paper is a review report.

Managing Safety Risks in Airline Maintenance Outsourcing

Managing Safety Risks in Airline Maintenance Outsourcing

The impact of perceived benefits and risks on current and desired levels of outsourcing: Hotel managers’ perspective

Abstract The purpose of this paper was to investigate the interactions between perceived benefits and risks of outsourcing and outsourcing adoption from the hoteliers’ perspective. Data were collected from 123 hotels in Egypt using a list of 32 hotel activities. Results revealed that managers’ perceived benefits of outsourcing had a direct positive effect on the current level of outsourcing, while indirect effects on the desired level of outsourcing. Interestingly, results confirmed the mediating role of current outsourcing between managers’ perceived benefits and the desired outsourcing. However, the perceived risks of outsourcing had a nonsignificant moderating effect. The findings provide implications for both theory and practice.

Logistic outsourcing risks management and performance under the mediation of customer service in agribusiness

ABSTRACTThis research analyses the influence of logistic outsourcing risks management on trade performance in agribusiness distribution chain. The paper scrutinises the relationship between Manufacturer – Logistic provider – Customers (distributors). We assume that outsourcing risks management can enhance trade performance. After a pre-survey on supply chain managers using individual interviews, quantitative data were collected on a sample of agribusiness managers. We performed data analysis by structural equation modelling methods. We found that the logistic outsourcing risks management is not significantly related to trade performance. However, this relation is positive and significant through the mediation of customer service, in the presence of the logistic capabilities of provider. Hence, managers in developing country consider logistic as a resource with distinctive capability, valuable, scarce and both difficult and costly to imitate. They prefer to manage it internally in order to avoid outsourcing risks. But in France, managers prefer to outsource because their internalisation does not provide a competitive advantage.

Quality risk in logistics outsourcing: A fourth party logistics perspective

We investigate an outsourcing logistics risk management problem under a principal-agency framework. A fourth-party logistics firm (4PL) deputes a third-party logistics firm (3PL) to complete the tasks received from clients. The 4PL cannot observe the effort/investment level of the 3PL on the delivery quality but only on the ex post delivery quality. Thus, a contract based on delivery quality is proposed to stimulate the 3PL to exert optimal effort/investment for the outsourced task. First, we derive the optimal contract contents both in symmetric and asymmetric information settings and show that in the asymmetric information setting, although a menu of contracts can induce the 3PL to tell the truth, asymmetric efficiency information can lead to a drop in delivery quality as well as in system-wide welfare. Then, to deal with this issue in the asymmetric information setting, we introduce two contracts: noncooperative bargaining and cooperative bargaining contracts. We find that the cooperative bargaining contract can ensure the 3PL exerts the maximum effort/investment level and achieves high-quality delivery and system-wide welfare. Finally, we extend our study to a case with discrete efficiency distribution and analyze various types of contracts as well as their implications.