Developing a Framework for Measuring Outsourcing Performance

Purpose: The popularity and growth in outsourcing has resulted in many different outsourcing arrangements, from strategic and business process outsourcing to selective and tactical outsourcing, on a national or global scale. Outsourcing is frequently considered a vital ingredient to corporate restructuring and business improvement initiatives. However, it is often treated as a fixed discreet event such as a make or buy decision. As the rational and strategic implications of outsourcing vary, so too does the required outsourcing process and performance measures. The purpose of this paper is to review and synthesis available empirical literature on outsourcing frameworks and performance management techniques, and develop a framework for measuring outsourcing performance. Research Approach: A sample of empirical academic publications on outsourcing frameworks and performance measures, across various scholarly journals constitute the main data for analytical purposes. It is compiled from searches of the main academic databases. The studies in the sample are clustered according to their main research areas, with a narrative approach being used to review developments in each area. Following analysis of the reviewed literature, a number of the frameworks and their measures are adapted and integrated to develop a conceptual framework for measuring outsourcing performance. Findings and Originality: This conceptual based framework brings an integrated perspective to outsourcing. It develops a dynamic process of strategic alignment between environmental drivers, corporate outsourcing objectives, the outsourcing process and the performance measures. The proposed conceptual framework seeks to integrate the environmental and organisational outsourcing drivers down into the outsourcing process, culminating in a managed outsourcing relationship. Research Impact: For both the researcher and practioner, the measured outsourcing framework will provide a more holistic approach when considering and implementing outsourcing. Practical Impact: This paper is a first step towards developing a framework for measuring outsourcing performance, which practioners will be able to apply when considering, analysing and managing an outsourcing initiative.