Performance Impact of Outsourcing Portfolio Configuration and Business Strategy

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Conference Proceeding

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Extant research on the impact of outsourcing on firm performance is largely at the contract level. This study takes a portfolio approach, i.e. examines the portfolio of outsourcing contracts that a firm is engaged in, to examine the impact of outsourcing on firm performance. While the motives and nature of task outsourced, based on the individual contracts impact the firm performance significantly, firms do engage in a number of outsourcing engagements simultaneously. The synergies and benefits realized across these engagements and the challenges associated with effectively and efficiently coordinating these relationships would amplify or attenuate the effect that BPO has on a firm’s performance. In addition to the BPO portfolio configuration, we also examine if the performance effects vary across firms pursuing different business strategies. Using the typologies developed by Miles and Snow (1978a), this study examines the impact of the portfolio configuration across firms pursing prospector and defender strategies. This study finds that the BPO portfolio configuration has a curvilinear relationship on the firm’s performance and that the impact of the portfolio configuration varies across firms pursuing different business strategies.


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