Examination of factors leading expansion of outsourcing and its arrangements in service sector

Abstract

Abstract Purpose– The purpose of this article is to identfy factors that influence the spread of outsourcing practice in service sectors, classified by WTO and investigate links between factors which lead service sector firms to adopt outsourcing and outsourcing relationship type. Research methodology – the autors conducted comprehensive review of the literature in the service sector and outsourcing practices researches to achieve a thorough understanding of the issues involved and identifying the problematic aspects and crucial factors groups affecting the outsourcing using in service sector. The structured interview with general managers in each service sector group were held in order to explore the factors determining outsourcing in separate service sector companies and reviel what relationship are used to maintain outsourcing arrangements. Collected data were analysed using statistical method. Findings – The range of factors that contribute the expansion of outsourcing in the service sector is distinctive and significantly narrower than those identified in the scientific literature. The significance of factors that lead service sector firms to adopt outsourcing varies according to what kind of activities - core or non-core are outsourced. Outsourcing relationships are based on short- and long-term contracts, preferred domestic outsourcing. Research limitations – Although main factors affecting expansion of outsourcing in service sector were revealed, the compatibility of expert opinions were weak. Therefore, more in-depth research could be carried out in each of the service sector groups and its sub-domains. Practical implications – the practical implication should explain how the results of the research could be used in practice; Originality/Value – While most studies of factors motivating outsourcing where based on manufacturing sector or separate service sector companies’ groups (hotels, hospitals, etc.), this is empirical study focusing at all service sector groups distinguished by WTO.