The Future of Outsourcing: Strategic Outsourcing Controls and the Backsourcing Evolution (Palgrave Studies in Accounting and Finance Practice)

This book provides a new evolutionary perspective on outsourcing. The traditional prioritization of continuous outsourcing has resulted in increased hidden costs that have sabotaged business profits. As a result of undisciplined outsourcing, businesses have lost a defining characteristic of their success: decision control. In contrast, the ability to combine outsourcing with backsourcing is a winning strategy for business leaders across a broad range of industries. In this book, the author traces the essence of the outsourcing industry as it has evolved over the past two centuries. With compelling case studies from the pharmaceutical, aviation, insurance, and cookware industries, this book moves beyond theorizing. It highlights key insights from some of the leading outsourcing pioneers who helped to define the industry. The case studies demonstrate the evolution of outsourcing, from a past marked by a costly outsourcing approach to a future fueled by the diversification of sourcing for optimal business success. Through the provision of decision models and best practices, this book provides academics and practitioners with tangible steps to implement successful outsourcing and backsourcing strategies. Lazaro A. Mederos is a global strategy leader and outsourcing executive with more than 20 years of international experience helping businesses thrive. He managed country-wide client engagements with IBM Strategic Outsourcing, and ultimately led an IBM organization comprised of more than 700 resources worldwide. Dr. Mederos is the President of the Board of Directors at the Backsourcing Advisory, a think tank community of global outsourcing leaders. He is also deeply engaged in community outreach to support the development of future business leaders. In recognition of his contributions, he was awarded the United States President's Volunteer Service Award, as well as the 2018 South Florida Community Leadership Award. Dr. Mederos attained a BBA from Florida International University, USA; MBA from Nova Southeastern University, USA; and a Doctorate of Business Administration from Grenoble École de Management, France Series Editors’ Foreword Contents List of Figures List of Tables 1 The Outsourcing Manifesto: The History, Rise, and Potential Fall of the Outsourcing Industry 1.1 Tracing Outsourcing to the Roots of Modern Economics 1.1.1 The Novel or “Nobel” Step in the Outsourcing Origin Story 1.1.2 The Strategy Model that Helped Birth the Outsourcing Industry 1.2 The Rise of Outsourcing Through the Evolution of Accounting 1.2.1 The Birth of Outsourcing Through Financial Accounting 1.2.2 The Birth of Outsourcing Through Management Accounting 1.2.3 The Rise of Outsourcing Through the Evolution of Management Accounting 1.3 The Potential Fall of Outsourcing and Need for Further Evolution 1.3.1 The Curse of Perceived Hidden Cost 1.3.2 The Curse of Diminished Quality Impacting Engagement Satisfaction 1.3.3 The Curse of Corporate Politics 1.3.4 The Curse of COVID-19 Disrupting Outsourcing with RPA’s Help 1.4 Conclusion Bibliography 2 Theorizing Backsourcing: At the Intersection of Strategy, Operations, and Control 2.1 Access to a Strategic Advantage 2.1.1 One Language, Many Definitions 2.1.2 Controlling Costs in Search of Outsourcing Success 2.1.3 Avoiding Operational Failure Through Service Agreements 2.1.4 Friends, Enemies, and Training the Competition 2.2 Building the Backsourcing Body of Knowledge 2.2.1 First Steps Towards Building a New Body of Knowledge 2.2.2 Backsourcing Metamorphosis: Critical Success Factors 2.2.3 Backsourcing Metamorphosis: Risk Management 2.2.4 Backsourcing Metamorphosis: Outsourcing Strategy 2.3 Conclusion Bibliography 3 The Birth of an Industry from Backsourcing Pioneers 3.1 Outsourcing Satisfaction Transforming Engagements 3.1.1 Perceived Hidden Cost Negatively Impacts the Outsourcing Relationships 3.1.2 Diminished Quality Impacting Engagement Satisfaction 3.1.3 Relationship as a Part of Corporate Politics 3.1.4 Impact of Outsourcing Satisfaction on Backsourcing 3.2 Location Strategy Defining the Future of Outsourcing 3.2.1 Creating a Smart Outsourcing Network 3.2.2 Diversification to Stop Losing Control 3.2.3 The Evolution of Location Selection Strategy 3.2.4 Impact of Location on Services Leading to Backsourcing 3.3 Outsourcing Maturity Changing the Industry 3.3.1 Competitive Advantage Through Outsourcing Core Competencies 3.3.2 Organizational Expertise Growth Through Outsourcing Cycles 3.3.3 Impact of Outsourcing Maturity Level Ultimately Leading to Backsourcing 3.4 Conclusion Bibliography 4 The Future of Outsourcing: Strategic Outsourcing Controls and the Backsourcing Evolution 4.1 Case Studies: Discovering the Future of Outsourcing Through the Birth of Backsourcing 4.1.1 Pharmaceutical Industry Case Study Retaining the Best Resource Balance Formula for Resources Designing the Future, from Failure to Success Formulating the Future of Outsourcing: Hybrid Backsourcing Strategy Conclusion of a Completely New Way to Do Business Globally 4.1.2 Insurance Industry Case Study Ensuring the Worst Political Landscape Too Insured to Make a Difference No More Decision Stagnation Conclusion that Leaves Flexibility to Succeed 4.1.3 Cookware Industry Case Study Getting Burned by Over Outsourcing Trouble in the Kitchen Finally Cooking with Gas: New Value-Driven Backsourcing Model Conclusion of a “Well-Done” Backsourcing Strategy 4.1.4 Aviation Industry Case Study Do We Take off Outsourcing or Is There Trouble on the Landing Path Natural Evolution into a New Outsourcing Strategy Taking Back Control of Your Flight Plan Conclusion to Flight and Backsource Safely 4.2 Conclusion Bibliography 5 The Development of a New Outsourcing Theory Uncovered by Backsourcing 5.1 The Significance of the Pharmaceutical Industry on the Future of Outsourcing 5.1.1 From Leeches to Today’s Pharma and Sourcing in Between 5.1.2 Current Outsourcing Evolution Within the Pharmaceutical Industry 5.2 How the Aviation Industry Is Helping Outsourcing Take Flight 5.2.1 Aviation Industry Market Maturity 5.2.2 Current Outsourcing Evolution Within the Aviation Industry 5.3 Sourcing Evolution Setting the Foundation for Future Outsourcing Direction 5.3.1 The Past: Outsourcing as a Key Strategic Element 5.3.2 The Future: Backsourcing as a Key Strategic Element 5.4 The Future of Outsourcing Controls 5.4.1 Yesterday’s Everlasting Cost Reduction Hunger 5.4.2 Backsourcing Success Controls 5.5 Conclusion Bibliography 6 Strategic Backsourcing as a Powerhouse 6.1 Why Are Companies Beginning to Backsource? 6.1.1 Backsourcing for Value 6.1.2 Backsourcing Best Practice 6.1.3 Backsourcing as a Competitive Weapon 6.2 The Mederos Backsourcing Evolution Quadrant 6.2.1 Hybrid (Outsourcing + Backsourcing) 6.2.2 Diversified Outsourcing 6.2.3 Functional Outsourcing 6.2.4 Classical Outsourcing 6.3 The Lazarus Decision Model (LDM) 6.3.1 Before Implementing the LDM 6.3.2 Academic and Management Relevancy 6.3.3 How to Implement the LDM 6.4 Conclusion Bibliography Conclusion Glossary Index This book provides a new evolutionary perspective on outsourcing. The traditional prioritization of continuous outsourcing has resulted in increased hidden costs that have sabotaged business profits. As a result of undisciplined outsourcing, businesses have lost a defining characteristic of their success: decision control. In contrast, the ability to combine outsourcing with backsourcing is a winning strategy for business leaders across a broad range of industries. In this book, the author traces the essence of the outsourcing industry as it has evolved over the past two centuries. With compelling case studies from the pharmaceutical, aviation, insurance, and cookware industries, this book moves beyond theorizing. It highlights key insights from some of the leading outsourcing pioneers who helped to define the industry. The case studies demonstrate the evolution of outsourcing, from a past marked by a costly outsourcing approach to a future fueled by the diversification of sourcing for optimal business success. Through the provision of decision models and best practices, this book provides academics and practitioners with tangible steps to implement successful outsourcing and backsourcing strategies. Lazaro A. Mederos is a global strategy leader and outsourcing executive with more than 20 years of international experience helping businesses thrive. He managed country-wide client engagements with IBM Strategic Outsourcing, and ultimately led an IBM organization comprised of more than 700 resources worldwide. Dr. Mederos is the President of the Board of Directors at the Backsourcing Advisory, a think tank community of global outsourcing leaders. He is also deeply engaged in community outreach to support the development of future business leaders. In recognition of his contributions, he was awarded the United States President's Volunteer Service Award, as well as the 2018 South Florida Community Leadership Award. Dr. Mederos attained a BBA from Florida International University, USA; MBA from Nova Southeastern University, USA; and a Doctorate of Business Administration from Grenoble École de Management, France