Outsourcing In A Virtual Environment:Assessing Costs, Structures And Payoffs

This study’s primary topic is outsourcing within a virtual environment. The main focus of this research project is shown to be an effort to expand the general knowledge of outsourcing with respect to how important and still developing virtual solutions can enhance the efficacy of the outsourcing strategy itself. Specifically, the purpose of this virtual outsourcing related study has been to improve the understanding of how many enterprises achieve their cost-leadership in their industries by developing and implementing outsourcing strategies utilizing virtual technologies and processes. The study indicates how factors such as the financial performance of innovative firms which have outsourced important business components to alternative international markets like China and India have been improved. Innovative firms constantly seek to improve their business models and increasingly these efforts are leading competitive enterprises to consider or select virtual outsourcing solutions for internal administrative processes. This level of improvement is essentially compared to innovative firms that have maintained their own internal administrative or back-office processes in an in-house manner.The study’s rationale is a rationale that is derived from an accurate assessment of the cost structures that are commonly associated with outsourcing and how these cost structures are affected by virtual outsourcing solutions. The transaction cost theory provided the theoretical framework for this project’s analytical processes. The literature review was utilized to introduce a significant amount of discussion regarding the subject of outsourcing, virtual outsourcing solutions and the subsequent decision-making processes that support these types of strategies. By expanding on the concepts relating to outsourcing, virtual outsourcing and the strategic benefitsthat become available within the context of such solutions, it becomes apparent that virtual outsourcing is rapidly becoming not so much a competitive option but rather a competitive benchmark that firms must adopt just to remain competitive. This is as opposed to other strategies in which firms still have the option to not implement them or, alternatively, to implement them as a means of achieving a sustainable competitive advantage. The literature examined within this study is able to identify the unique advantages of this virtual outsourcing solution. Consequently, this study’s overall breadth of discussion and examination of the study’s existing literature has established a process of improved understanding of the business enterprise case and the underlying rationale that innovative firms must develop in order to arrive at a virtual outsourcing decision. Hence, the overall emphasis within this study’s literature review was designed to demonstrate the importance of virtual outsourcing as a business enterprise strategy for innovative firms.This study also illustrated the data’s statistical validity and reliability through the. inclusion of primary and secondary data in the context of the case study methodology. This also found that important perspectives related to virtual outsourcing solutions such as the fact that most innovative firms that employ some form of virtual outsourcing solution typically collect performance related data on a weekly basis although these figures by no means provide a universal standard. Additionally, this virtual outsourcing related study also revealed that the decision to virtually outsource some type of business process or activity is made at the highest levels of the innovative firm. The decision to select, develop and implement such a virtual outsourcing solution cannot be made at any other level of the virtual outsourcing organization than executive leadership. This is because it does require initial resource commitments that cannot be authorized at any other level. The decision to outsource some internal administrative or routine process must be one that considers whether or not critical IP is involved, either directly or indirectly, in the targeted process. The competitive enterprise cannot risk giving away or losing its core IP as this will essentially ensure that its newer competitors will arise from low cost markets with which it will find it very difficult to compete. However, it was also demonstrated that afterwards the virtual outsourcing process is actually controlled by mid-management levels and lower within the virtual outsourcing organization. This study’s case study target was the innovative firm identified as UCB which is a large multinational enterprise that competes in three primary industries but primary relies on the pharmaceuticals industry for the majority of its revenues. UCB was shown to be a multinational enterprise that has an extensive technology infrastructure and therefore has to commit an excessive amount of resources towards maintaining and developing this technology infrastructure. The case study analysis illustrated how UCB could actually offload much of its data storage, data warehousing and data analysis activities to a3rd party provider of these services. This study also discovered that virtual outsourcing is increasingly not a strategic alternative at all but rather a competitive necessity. It is a competitive necessity for an innovative firm because the alternative which is to do nothing or to remain static implies that the innovative firm is likely not to remain relevant in its industry for very long. In order to remain competitive most innovative firms in the contemporary business space must employ some form of outsourcing solutions and increasingly virtual outsourcing is the strategy of choice. The process of identifying and selecting an internal process or administrative task to virtually outsourcing is the most important aspect of this entire strategy. It also concluded that innovative firms that are intent on developing a virtual outsourcing solution must undertake a value chain analysis. Value chain analyses are a necessity because the innovative firm and its leadership must recognize which areas are most critical in terms of their intellectual capital so that these areas and functions are not selected for a virtual outsourcing solution. Thus, these innovative firms must work to ensure that they correctly identify those processes that contribute tangible value to the innovative firm’s operations. This project’s recommendation for future study mentioned the emerging trend in the business enterprise space of developing a shared services model. This shared services model is a threat to the entire virtual outsourcing industry because it takes these technology driven processes and moves them out of the virtual outsourcing organization but keeps them within the industry in a shared innovative firm that is actually developed by participants in a given industry.