Outsourcing Complex Business Processes: Lessons from an Enterprise Partnership

Holweg, Matthias and Pil, Frits K. (2012) Outsourcing Complex Business Processes: Lessons from an Enterprise Partnership. California Management Review, 54 (3). pp. 98-115.


Outsourcing initiatives are key to firm efforts to focus on core competencies, alter engrained practices and attain
significant cost reductions in non-core processes. Extensive thought goes into the selection of outsourcing service
providers, with the aim of enlisting vendors that have the competence and reputation to lower cost and enhance
service levels. However, in addition to traditional fee-for-service outsourcing, another option is to develop a new
enterprise that is wholly or partially owned by the outsourcing entity to take on the activities that are externalized
—a so-called “enterprise partnership.” This article examines one of the first examples of such a partnership: BAE
Systems’ efforts to outsource its HR services in collaboration with Xchanging. It tracks the evolution of the resulting
enterprise partnership from the perspective of both the new vendor and the outsourcing firm. The article also
discusses the need for explicit contractual recognition of key phases of the outsourcing life cycle as a means to
reduce inevitable in-process conflict. Understanding the divergence of interests that naturally emerge is critical to
realizing the long-term promise that enterprise partnerships offer

Item Type: Article
Keywords: Outsourcing, Inter-firm Relations, Enterprise Partnership
Subject(s): Operations management
Date Deposited: 05 Feb 2016 12:28
Last Modified: 07 Aug 2018 12:32
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5886

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