CONTROL: GETTING IT AND KEEPING IT IN BUSINESS PROCESS OUTSOURCING

Jane C. Linder and Joseph P. Sawyer

Journal of Applied Corporate Finance, 2003, vol. 15, issue 4, 72-80

Abstract: Proposals to outsource corporate functions often meet with resistance because of control issues and concerns about proprietary information. But proponents of outsourcing are quick to note that many of these reservations dwell on perceptions and apprehensions, rather than on the track record of outsourced projects. In fact, veterans of successful arrangements observe that outsourcing frees up valuable management time and thus enables an enhanced form of control. The key is to supplement direct, supervisory control mechanisms like service control agreements and performance tracking with indirect, enabling controls—senior team affiliation, performance visibility, interface management, and employee allegiance—and then lay the groundwork for these enabling controls early in the outsourcing relationship. Rather than getting locked into static controls, forward‐looking managers adopt a broad control framework to go beyond achieving the expected improvements and create the potential to add new value. The result is an outsourcing relationship that can accommodate change, move in a new direction, and seize emerging opportunities.

Date: 2003
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Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr.

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