Coping with outsourcing: an interaction and network perspective

Many companies that have undertaken outsourcing projects have found themselves struggling to control the activity they once controlled in-house. This paper proposes that the root of the problem is often that companies fail to recognise the importance of managing the relationship between the outsourcing organisation and the service provider, or supplier, which performs the outsourcing activity. Adopting an interaction and network perspective on outsourcing, the authors argue that both parties involved need to take appropriate measures to manage the outsourcing relationship and focus on developing trust and commitment as a key part of the outsourcing process. The authors draw on an illustrative case study of two companies involved in a complex outsourcing relationship that eventually failed. The case illustrates how trust and commitment supported by an atmosphere and culture conducive to developing close, strong relationships, is required to achieve long-term, mutually beneficial outsourcing relationships. The paper concludes with a discussion of key factors in the outsourcing process.