Implications of Selecting On-Site and Off-Site Outsourcing Projects

Abstract

The purpose of this master thesis is to identify the advantages and disadvantages of selecting on-site and off-site outsourcing projects, in an attempt to strengthen the knowledge concerning this area of research. By looking at the selection criteria, risk factors and success factors, one can get a greater understanding of the implications of selecting one type of outsourcing over the other. A review of relevant theories is presented within the area of outsourcing, including the process of outsourcing and how it relates to organizational structures. A potential gap in the literature is identified, being that little empirical research has gone into investigating the different implications of location-based outsourcing and how these relate to each other. The literature review is used to identify the advantages and disadvantages of on-site and off-site outsourcing. These are then used to construct a survey among the employees in the microcontroller-development firm Atmel, in order to see how these factors relate to real-life experiences. The findings from the survey were then used as a foundation for three in-depth interviews with managers at Atmel to further elaborate on the differences between on-site and off-site outsourcing.The findings from this research indicate that on-site outsourcing is preferred over off-site outsourcing because of improved day-to-day communication and more effective management of expectations. Off-site outsourcing however, offers access to a greater pool of resources and talents. The survey found that more time was spent on the preparation phase in off-site projects, while training and managing the relationship was more time-consuming on-site. The interviews revealed that good communication in off-site outsourcing can be challenging, and developing a good relationship with the vendor is more of a challenge in off-site outsourcing relationships than it is for on-site. The practical implications of the physical distance between the outsourcing partners would dictate the client's ability to follow up and being able to influence the service provider during the outsourcing process. This conclusion is supported in the case of Atmel, where the levels of satisfaction are much higher in on-site outsourcing compared to off-site.