• Asian Journal of Business Environment
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• v.8 no.3
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• pp.23-31
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• 2018

Purpose - The purpose of this study is to analyze the comparative financial performance of outsourcing and vertically integrated corporations from Footwear and Apparel industry. Research design, data, and methodology - Secondary data is collected from the published audited annual reports of the footwear and apparel corporations listed on stock exchanges globally. In the current study, 40 footwear firms have been opted that include 20 vertically integrated and 20 outsourcing firms. The sample is distributed into two groups based on threshold up-to 50 percent respectively outsourcing and vertically integrated companies. Sample independent t-test is applied to compare the financial performance of outsourcing and vertically integrated firms. Results - Based on the investigation of 10 years' data of financial ratio, the results of the study show that there is significant difference between outsourcing and vertical integration strategy on return on assets, return on equity while insignificant difference has found with profit margin. Conclusions - The findings of the current study indicates that there is significant difference between the financial performance of outsourcing and vertically integrated firms in terms of return on asset, return on equity and insignificant difference in terms of profit margin.

• Journal of Information Technology Applications and Management
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• v.10 no.3
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• pp.75-92
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• 2003

In order to investigate IS(Information Systems) outsourcing cost estimation model preference of firms, this study reviews previous literatures on outsourcing and firm characteristics. The relationships between firm characteristics and IS outsourcing cost estimation model preference are analysed. Four major factors of firms characteristics are found and classified. IS outsourcing cost estimation model with SLA are found to have a strong relationship with organizational culture. Future research will be needed to verify the result of this exploratory study.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2007.11a
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• pp.256-263
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• 2007

Corporate managers look at IT outsourcing as long-term strategic choices not as short-term tactical ones, and maximizing the effect that IT outsourcing brings about is the main concern to them. Emerging different types of IT outsourcing and their effects on the corporate business decisions necessitate the research on this subject. According to previous researches, the Intent for IT outsourcing is categorized as IS Improvement, Business Impact, and Commercial Exploitation. The decison factors for these IT outsourcing include corporate strategy types, IT role, and interaction between these two. Firm size and IT maturity are selected as moderating factors to add the credibility to the research of the effect of IT outsourcing decision making. Analyzing IT outsourcing data collected from 61 large-size and mid-size domestic firms revealed that corporate strategy rather than IT role is more significant factor affecting the intent for IT outsourcing decision. That means the decision of outsourcing intent is affected by corporate strategy types. Defenders(as in corporate strategy types) tend to use IT outsourcing more as a means to improve information systems, compared to analyzers and reactors. Prospectors tend to use IT outsourcing more as a commercial exploitation, compared to analyzers and reactors. These outcomes prove that corporate strategy characteristics reflect outsourcing intent. There were previous researches that showed outsourcing decision depends on IT role however the hypothesis was rejected that IT role determines outsourcing intent. It was also rejected that the interaction between corporate strategy types and IT role determines outsourcing intent. Corporate decision makers should first analyze corporate strategy, and reflect it on the outsourcing intent when they make IT outsourcing decisions. Only the precise defining of IT outsourcing intent will lower the risk and increase the possibility of success.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2005.05a
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• pp.1072-1082
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• 2005

This study develops a contingency fit between client IT capability and vendor competence in IS outsourcing relationship by integrating both the contingency theory in organization and the relationship theory in IS outsourcing. By adopting a fit as a moderation, the relationship intensity of IS outsourcing is hypothesized to be influenced by the fit between client IT capability and vendor competence, thereby leading to the success of outsourcing. The testing data was obtained from 20 IS outsourcing projects from both clients and vendors in Korea. The research model proposed in this study was then tested using the structural equation model (SEM). As expected, the result shows that when there is a fit between client IT capability and vendor competence, higher level of relationship intensity and outsourcing success exhibits. The findings have significant impactions for further research and practice.

• Journal of Information Technology Applications and Management
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• v.13 no.4
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• pp.181-195
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• 2006

In recent years, increasing attention has been paid on how to manage a successful relationships between the receiver and provider of the Information Systems(IS) outsourcing services. This study explores the sources of influence for successful outsourcing relationships. Based on the Jaworski's control combination model for marketing, we (1) propose a management combination model of outsourcing relationships where trust is introduced as an intervening variable and outsourcing compleyity as a moderating variable, (2) test this model using a sample of 94 outsourcing projects in 36 organizations that have outsourced there IS functions to external service providers. The results indicated several significant findings. First, the deployment of management mechanism such as contract mechanism and trust building has a significant effect on the outsourcing success through trust only. Second, complexity of outsourcing activities has a moderating effect on relationship management combinations.

• Asia pacific journal of information systems
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• v.20 no.3
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• pp.115-137
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• 2010

Information technology (IT) outsourcing, the use of a third-party vendor to provide IT services, started in the late 1980s and early 1990s in Korea, and has increased rapidly since 2000. Recently, firms have increased their efforts to capture greater value from IT outsourcing. To date, there have been a large number of studies on IT outsourcing. Most prior studies on IT outsourcing have focused on outsourcing practices and decisions, and little attention has been paid to objectively measuring the value of IT outsourcing. In addition, studies that examined the performance of IT outsourcing have mainly relied on anecdotal evidence or practitioners' perceptions. Our study examines the contribution of IT outsourcing to economic growth in Korean industries over the 1990 to 2007 period, using a production function framework and a panel data set for 54 industries constructed from input-output tables, fixed-capital formation tables, and employment tables. Based on the framework and estimation procedures that Han, Kauffman and Nault (2010) used to examine the economic impact of IT outsourcing in U.S. industries, we evaluate the impact of IT outsourcing on output and productivity in Korean industries. Because IT outsourcing started to grow at a significantly more rapid pace in 2000, we compare the impact of IT outsourcing in pre- and post-2000 periods. Our industry-level panel data cover a large proportion of Korean economy-54 out of 58 Korean industries. This allows us greater opportunity to assess the impacts of IT outsourcing on objective performance measures, such as output and productivity. Using IT outsourcing and IT capital as our primary independent variables, we employ an extended Cobb-Douglas production function in which both variables are treated as factor inputs. We also derive and estimate a labor productivity equation to assess the impact of our IT variables on labor productivity. We use data from seven years (1990, 1993, 2000, 2003, 2005, 2006, and 2007) for which both input-output tables and fixed-capital formation tables are available. Combining the input-output tables and fixed-capital formation tables resulted in 54 industries. IT outsourcing is measured as the value of computer-related services purchased by each industry in a given year. All the variables have been converted to 2000 Korean Won using GDP deflators. To calculate labor hours, we use the average work hours for each sector provided by the OECD. To effectively control for heteroskedasticity and autocorrelation present in our dataset, we use the feasible generalized least squares (FGLS) procedures. Because the AR1 process may be industry-specific (i.e., panel-specific), we consider both common AR1 and panel-specific AR1 (PSAR1) processes in our estimations. We also include year dummies to control for year-specific effects common across industries, and sector dummies (as defined in the GDP deflator) to control for time-invariant sector-specific effects. Based on the full sample of 378 observations, we find that a 1% increase in IT outsourcing is associated with a 0.012~0.014% increase in gross output and a 1% increase in IT capital is associated with a 0.024~0.027% increase in gross output. To compare the contribution of IT outsourcing relative to that of IT capital, we examined gross marginal product (GMP). The average GMP of IT outsourcing was 6.423, which is substantially greater than that of IT capital at 2.093. This indicates that on average if an industry invests KRW 1 millon, it can increase its output by KRW 6.4 million. In terms of the contribution to labor productivity, we find that a 1% increase in IT outsourcing is associated with a 0.009~0.01% increase in labor productivity while a 1% increase in IT capital is associated with a 0.024~0.025% increase in labor productivity. Overall, our results indicate that IT outsourcing has made positive and economically meaningful contributions to output and productivity in Korean industries over the 1990 to 2007 period. The average GMP of IT outsourcing we report about Korean industries is 1.44 times greater than that in U.S. industries reported in Han et al. (2010). Further, we find that the contribution of IT outsourcing has been significantly greater in the 2000~2007 period during which the growth of IT outsourcing accelerated. Our study provides implication for policymakers and managers. First, our results suggest that Korean industries can capture further benefits by increasing investments in IT outsourcing. Second, our analyses and results provide a basis for managers to assess the impact of investments in IT outsourcing and IT capital in an objective and quantitative manner. Building on our study, future research should examine the impact of IT outsourcing at a more detailed industry level and the firm level.

• Journal of Information Technology Applications and Management
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• v.12 no.1
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• pp.241-259
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• 2005

This study explores a model of partnership to the success of outsourcing CTI(computer telephony integration) based customer service centers of a telecommunication service company. The motivation of the study is to extend the research on IT outsourcing to IT-enabled BPO of customer service centers as a specific IT outsourcing practice. Previous research on IT outsourcing partnership and success is reviewed for developing an a research model of IT-enabled BPO. This model is proposed based on the previous partnership success models in information systems research. The results of the study confirm major factors related to successful IT-enabled BPO in previous research. Especially, the specificity of a contract and strategic collaboration in partnership are found to be influential on the success of IT-enabled BPO.

• Asia pacific journal of information systems
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• v.6 no.1
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• pp.195-222
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• 1996

Faced with the challenge of reducing costs and improving competitive position, firms have recognized outsourcing as an important information systems (IS) strategic option. It has not been understood clearly what determines IS outsourcing. Based on the IS literature and transaction cost economics, cost efficiency related factors were identified, and a questionnaire survey was conducted. The results based on 181 responses from the bank executives in U.S. revealed that vendor production cost advantage and transaction risk are significant predictors of degree of outsourcing and outsourcing preference for data processing services. Insufficiency of IS funds and information technology uncertainty were found to be not only positively associated with vendor production cost advantage, but also directly associated with outsourcing preference and degree of outsourcing. Firm size is, however, not significantly related to vendor production cost advantge and IS outsourcing.

• Knowledge Management Research
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• v.11 no.3
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• pp.31-45
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• 2010

IT outsourcing studies have centered on the separate effect of formal contract and relational trust on IT outsourcing performance. In addition, previous studies ignored the importance of the relational capability that combine the formal contract and partnership can be able to deliver IT outsourcing effects. In this paper, we propose an IT governance commitment as a mediated role between relational capability and IT outsourcing performance. We collected data from 143 client companies of IT outsourcing and analyzed it using the PLS method. Our findings are revealed as following: At first, relational capability significantly and directly influence IT governance commitment as well as indirectly through formal contract and partnership. Secondly, IT governance commitment mediate between relational capability and IT outsourcing effect, and in turn affect IT outsourcing performance. The results and implications are further discussed.

• International Commerce and Information Review
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• v.11 no.4
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• pp.215-228
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• 2009

This research considers to analyze the importance and priority order of outsourcing partner selecting factors on plant exporters. This research deals with case study on the outsourcing in the "A" plants exporter. To obtain the goal this research, firstly, based on reviewing previous literature and taking professional advice, the selecting factors were identified and conceptualized, and we made the hierarchy model and utilized AHP in analysis method. Secondly, AHP model constructed 3 higher factors, and 9 lower factors. Thirdly, the data used for the weight values for the outsourcing partner factors were collected from outsourcing experts and officers in "A" company. The 3 higher factors were 'Firm's Competence', 'Customer/User Factor', and 'Systemic Factor', and the 9 lower factors were 'experience of outsourcing', 'competency based HR', 'market share', 'reliability', and 'communication', etc. As the results of the analysis, this research evaluated with an importance highest among selecting factors of outsourcing partner of "A" company were 'Customer/User Factor(46.5%)', 'Systemic Factor(27.8%)' and 'Firm's Competence(25.7%)'. And importance highest among lower selecting factors of outsourcing partner of "A" company were 'reliability(31.4%)', 'competency based HR(14.4%)' and 'communication(13.7%)'. The developed model and selecting factors of outsourcing partner are expected to contribute on effective decisions on plants exporters. Managerial implications and future research directions are suggested based on findings.