The Effects of IT Outsourcing on Retail Companies

The Effects of IT Outsourcing on Retail Companies Introduction Information technology has changed the business processes tremendously. This technological revolution has transformed organizations and businesses such that transactions can be initiated and executed within the shortest span of time. The introduction of the Internet further contributed to the revolution with remote sites able to connect over the Internet and exchanging data, information, and currency.Advertising We will write a custom proposal sample on The Effects of IT Outsourcing on Retail Companies specifically for you for only $16.05 $11/page Learn More The businesses that pioneered information technology quickly included this technology in their business processes. These developed into showcase models in information technology. The cost of implementing these technologies increased over time. As such an opportunity gave itself in which information technology service providers would offer tailored and business-oriented services to willing bu sinesses at a fee. This option was considered against the rising costs of setting up an IT department. It is this process of outsourcing that has taken the information technology age to the next level. Outsourcing has enabled businesses in need of technologically knowledgeable processes but lack the technical and human capacity to outsource such services and processes to technological experts at a stipulated cost (Pinnington and Woolcook 1999; Stakes 1995). Outsourcing has opened up frontiers in IT standardization, especially in the business world where these businesses can acquire IT services from third party organizations and as such benchmark their processes to the global standards. This study is specifically going to address the effects of information technology outsourcing among retail businesses in the United Kingdom. Background and research problem definition IT outsourcing has been around before the turn of the century. Indeed as more businesses discovered the need and advan tages of including IT in their business processing, information technology became the most expensive form of technology then. However, in this a business opportunity arose where information technology astute organizations would lend out their technology by outsourcing to those businesses and organizations that had need then.Advertising Looking for proposal on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More It is during this period that businesses such as the British Steel turned to Gap Gemini to outsource their central management service (CMS) unit. British Steel has a workforce of about 50,000 with a turnover of more than 7000 million UK pounds (Brown and Wilson 2005; Linder, Cole and Jacobson, 2002). This company runs a central management services unit to provide exceptional IT support for the company’s finance, payroll, and human resources. CMS also covers some processes within the company’s ope rational system. The British Steel case study is indicative that IT has brought with it special organizational need to ensure facility management. On acquiring new systems through business re-engineering, organizations often realize that they are not able to optimize these systems and therefore have minimal benefit. This is mainly caused by resistive organizational culture that offers little room for change to take place within the organization. Such organizations or businesses turn to outsource such processes to ensure to ensure the processes are carried out professionally and at exceptional standards because IT has a global scope. Therefore, British Steel just like many retail businesses in the United Kingdom turned to Cap Gemini a world class IT Company that the steel manufacturer outsourced about one third of its processes covered within their CMS. British Steel intention to outsource was to gain competitive advantage by maintaining high quality standards with more tahn 99% for key indicators, establish perpetual improvement programs even through the British Steel business improvement program; ensuring a smooth transition of IT responsibilities with minimal disruption to the existing IT system, and safeguarding the interests of its workforce. Several years down the line, the British Steel management intimate that it is about the right IT that can help a company gain competitive advantage in the global market and to this company, outsourcing was the key. Research Questions The British Steel case is just one among the many cases that has experienced the benefits of, IT outsourcing considered a vital undertaking and has vast influence on the economies of countries over the world (Sullivan and Steven 2003).Advertising We will write a custom proposal sample on The Effects of IT Outsourcing on Retail Companies specifically for you for only $16.05 $11/page Learn More Retail businesses form an important stratum of the general business eco nomy. Retail businesses must have the capability to support evolutionary business processes as the customer needs continue to change. It is this flexibility that can enable such businesses to remain competitive. However, these technology changes come at a high cost of implementation. Faced with such a dilemma, retail businesses will undoubtedly resort to outsourcing to maintain competitive advantage. This research proposal therefore aims at studying the effects of outsourcing in IT and their effects on retail companies, especially in the UK. In so doing, the research will be guided the following main research questions: What are the factors that lead to IT outsourcing among retail companies? What are the effects of IT outsourcing among retail companies? What is the general trend among retail companies in the UK as concerns IT outsourcing? Upon answering the above research questions, a conclusion could be made on the relationship between IT outsourcing and retail companies (De Vaus 2002). Recommendations will also be made after this study on the emerging retail business trends in the UK poised to benefit from IT outsourcing to establish competitive advantage. Research Objectives Based on the research questions, the research objectives can be derived. As stated earlier, the main aim of this research is to establish what effect IT outsourcing has on retail companies in the UK (Bryman and Bell 2007). This research focuses at clearly identifying the IT outsourcing processes with reference to retail business and how the two are related. This implies that the research objectives will include:- To determine reasons IT outsourcing is gaining attention among retail companies. To determine typical effects of IT outsourcing among retail companies in the UK. To determine the general IT outsourcing trends among retail companies in the UK. Literature review IT outsourcing continues to draw much attention from many scholars, academicians, professionals, and business exper ts. This has resulted in a continuous expanding knowledge base focusing on outsourcing and its effects on business processes. However, a review of most of these articles reveals that even though writers differ in some instances, the fact still remains that IT outsourcing has had a significant impact on retail companies all over the world (Jack 2009). This impact affects countries’ economies in many ways. In the article; How Outsourcing Affects the U.S. Economy, Hasan (2008) agrees that indeed outsourcing has brought with it a mixture of effects.Advertising Looking for proposal on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Some of the effects according to the articles have been beneficial, especially to retail business. The author notes that the dynamitic advantage that outsourcing brings with it has benefited retail industry because of cheap imports and subsequently stronger exports. It has also saved money for these companies. Gordijn (2002) concurs that the outsourcing process is currently considered as a positive contributor to any country’s economy. Research has shown that service jobs generate less income as compared to manufacturing jobs. In fact, the latter are considered as those responsible for creating the wealth in any nation. On the contrary, service jobs consume this wealth. Research findings further indicate that more businesses are currently depending on IT to gain the needed competitive edge. However, it is also true that information technology implementation, especially for a business critical process has a high price tag. As such, IT outsourcing puts the country’s econ omy on the line (Stern and El-Ansary 1992). The trend is not any different with retail companies that must adhere to the state of economy. The outsourcing practice can apply to nearly all types of business. This process is preferred by most business experts because it is considered cost effective. It has been statistically proven that outsourcing can result into reduced costs by between 50 and 60%. For instance, companies in Europe outsource up to $19 trillion spent on a daily basis on processes like sales and administration. Nevertheless, in Futurist (2011) review of literature, he states, â€Å"despite outsourcing being cost-effective, efficient, productive and strategic, it is also condemned as evil, money-grabbing, destructive, ruthless, exploiting the poor, destroying communities and nations† (Futurist 2011, p. 1). Futurist (2011) further asserts that outsourcing has compromised low-cost nations. This is evident with the increased migration from the high-earning nations to the compromised ones. This has led to labour shortages. China and India are a perfect example in this context (Outsource mag, 2011). These two nations, especially China, are experiencing close to 100% salary inflation, and India has been hit by an acute shortage of corporate leadership as a result of large-scale outsourcing. Some of the typical business processes that qualify to be outsourced to IT- oriented companies are those involving electronic data interchange (EDI). According to Fernie (1999), sending financial information is a vital undertaking for any business. However, the process is considered very sensitive. Retail companies continue to focus on electronic automation of such processes as invoicing, order processing dispatch, and other routine processes. Such processes will definitely require EDI to simplify trading cycles and accelerate transactions. However, based on the sensitive nature of the data and information handled by the EDI systems, the cost of their impleme ntation remains high and beyond the reach of many retail companies in the UK and around the world. According to Pinnington and Woolcook (1999) electronic commerce that fundamentally relies on EDI is quickly becoming standard based. Accordingly companies such as Microgen UK are seeing an opportunity to provide the EDI functions to small and medium enterprises who cannot afford to implement EDI full-scale. With companies such as Microgen UK, these retail companies have an opportunity to outsource their EDI processes and therefore compete effectively on the global market. Generally, there is much literature on the outsourcing process and the effect and benefits to the business or organization. However, little is available in this domain, especially related to the effects of IT outsourcing among retail companies within the United Kingdom (Linder, Cole and Jacobson, 2002). This research focuses on this area of study and intends to draw vital conclusions that can be used by professionals, academicians, and businesspeople. Theoretical framework Theories are usually developed to try to predict certain happenings. These happenings may include events of behaviour. A theoretical framework of the study here will include a structure capable of holding a theory during the research. The study here is about the effects of IT outsourcing among retail companies in the UK. The research problem addresses IT outsourcing among retail companies in the UK. The purpose of this research is to relate IT outsourcing to retail businesses in the UK and highlight the effects of outsourcing on retail businesses. The theoretical framework here will represent a theory that can be used as a basis for conducting the research. This research is likely to build a theory in line with the objective of this research. The researcher will use inductive reasoning to address the research problem the effects of IT outsourcing among retail companies in the UK. The research proposal will focus on all variabl e involved in the relationship between IT outsourcing and retail companies (Halvey and Melby, 2005). Based on the literature review it has been established that the two are interconnected and affect each other. The research proposal therefore aims at determining the link between them. The variables will also be vital in determining statistical relationship between IT outsourcing and the performance of retail companies (Eriksson and Kovalainen 2008). Research methods and sampling techniques to be used Collection, sampling, and analyzing of data should be done methodically and with much keenness (Veal 2005). There are a number of research approaches proposed for this study. In the article; The Research Process, Bouma (2004) states that the researcher during the inductive approach makes specific observations from the collected data and arrives at a new theory by observation and hypotheses (Stakes 1995; Yin 2008). The deductive approach starts by reviewing and gathering theory, collecti ng data, and drawing conclusions. However, these two research approaches are not mutually exclusive; hence a research study may have elements of both (Hamel 2000). This research will also take a quantitative research approach. In this approach the problem t be addressed will require an in depth explanation (Saunders 2009). Additionally, this approach will identify the variables within the problem and establish a correlation between these variables. This research is mainly literature-based where the researcher is intending â€Å"to rely on scholarly evidence to justify the research problem† (Saunders 2009, p. 58). There will be a deliberate attempt to address the inadequate knowledge that exists in this field of research. The research approach will also attempt to quantify the data collected. According to Kumar (2005), the quantitative approach examines and interprets data quantifiable, measurable, and finite. Acquiring quantitative data can be by experimentation, testing, and calculation. The results from this approach are usually displayed in a statistical format (Neuman 2006). Data analysis techniques to be used During this research the data collection strategy to be used will include transcription of the interview responses and field notes. These data will be categorized after open coding that includes an analysis of each interview question described as an item on term approach. Cross analysis as a data analysis technique is used for this research and will ensure that the process is analytically exhausted. The study must also be calibrated for credibility. The data on evaluation should be credible. Credibility involves truthfulness and value of the data. The proposed study will use triangulation where multiple data sources are considered. This enhances the data’s validity. Data validity and reliability Validity measures the extent to which an instrument used in data collection gives a true picture of what has been measured. Validity also refer s to the accuracy and meaningfulness of inferences derived from research data. Validity describes the degree to which the findings retrieved from a research are reflective of the concept under study. Structuring the interviews including the items selected for the interview schedule must be closely related to the variables under investigation for the instrument under consideration to qualify (Saunders 2009). The instruments used for this research study will be further evaluated as the study makes use of construct validity. This means that the instruments used will be constructed as suitable as possible to evaluate the theoretical concepts under study. As described earlier the effectiveness of the sampling process will work in conjunction with a sampling technique like snowball sampling at some point. The instruments used here will be constructed by the researcher with reference to the research objectives and under the supervision of a number of experts. Expected outcomes and research contributions The research will proceed on using the quantitative approach in which case the researcher will gather data using data collection instruments such as questionnaires and interviews. The researcher will also carry out document inspections and observations to identify data accurately that is pertinent to the study. The resulting data will be indicative of the fact that IT outsourcing has had various effects on retail companies in the UK. Ultimately, the outcome of this research is will determine that IT outsourcing is increasingly becoming a necessity for all retail business organizations that intend to harness the present technological advancement to their advantage. As such, target respondents will include retail business owners, scholars, government officials, and consumers. Based on the research questions practical and accountable the results are likely to be authoritative and can be used to develop a hypothesis and assist in decision making (Fink 2003). The hypothesi s of the research is based on factual literature views from previous researches. Similarly, the literature review will help give facts about the problem as it appears in different contexts and the various measures put in place and basing on the outcomes from these measures, the researcher will make recommendations (Collis and Hussy, 2009). Ethical issues and research limitations Most research studies have limitations and in this case, the following are the limitations and ethical issues expected in this research: The research will â€Å"quote some facts from secondary sources† (Saunders 2009, p. 256). There are high chances that the gathered information may be biased or outdated. Some vital information to help answer the researcher’s questions might not be made available because of limited research on the topic. Similarly, the study will heavily rely on the information collected from respondents. Therefore, selfish or biased response may affect the results of the whole project rendering it inaccurate. Due to financial constraint coupled with limited time, all effects of IT outsourcing on retail companies might not be adequately brought to light. The complexity of the whole process of theoretical study brings with it many processes that can lead to some aspects of the topics being forgotten. However, I will address this by being very careful to ensure that every aspect in the research questions and aims are adequately addressed (Neelankavil 2007). The limitation of using a descriptive survey research method is that a large descriptive survey may give superficial results. Alternatively, a small-scale descriptive survey with an emphasis on â€Å"qualitative† or â€Å"rich† detail has the limitation as poor generalization. Such small surveys are difficult to know how far the results can be applied elsewhere. The research may also suffer time constraints due to delayed approval by targeted study sample population, especially organization s. Project plan The research proposal includes a number of key activities. It is important that each of these activities is carried out comprehensively. From the methodology and research design, the project can follow the plan highlighted in the table below. Key activities for the project plan Setting up of the research questions and objectives (this includes deciding on the hypotheses of the expected results). Appropriately prepare the research instruments. This includes setting up the required mechanisms to facilitate research proposal such as recording materials and so forth. Paying a pre-visit to sights of the research. This will help in estimating various variables of the proposal like the expected budget as well as time scheduling. Reviewing the study objectives and questions based on the pre-visit findings. Carrying out the study and collecting data through the various methodologies highlighted. The collected data should be sampled and grouped for analysis and te sting the hypotheses to answer the research questions. Making conclusions and recommendations based on the research findings with reference to the literature reviews. Recording and present the research results. Reference List Bouma, G.D., 2004. The Research Process. 5th ed. South Melbourne: Oxford University Press. Brown, D. and Wilson, S., 2005. The black book of outsourcing: How to manage the changes, challenges, and opportunities. New York: Wiley. Bryman, A. and Bell, E., 2007. Business Research Methods. 2nd ed. Oxford: Oxford University Press. Collis, J. and Hussy, R., 2009. Business Research: A practical Guide for Undergraduate Postgraduate Students. 3rd ed. New York: Palgrave Macmillan. De Vaus, D., 2002. Surveys in Social Research. 5th ed. Crows Nest, New South Wales: Allen and Unwin. Eriksson, P. and Kovalainen, A., 2008. Qualitative Methods in Business Research. Los Angeles: Sage. Fernie, J. 1999. Outsourcing distribution in UK retailing. Journal for Business Logist ics, 21(2), pp. 83–95. Fink, A., 2003. The Survey Kit. 2nd ed. Thousand Oaks, CA: Sage Publication. Futurist, K., 2011. The Future of Outsourcing Impact on Jobs. Journal on High Growth Economy, Web. Gordijn, J., 2002. Value-based Requirements Engineering Exploring Innovative e- Commerce Ideas. Amsterdam: Vrije Universiteit. Hamel, G., 2000. Leading the revolution. Oxford: UK Oxford University Press. Hasan, A., 2008. How Outsourcing Affects the U.S. Economy! Directory Journal,  Web. Halvey, J and Melby, M., 2005. IT Outsourcing transactions: Process, strategies,  and contracts. 2nd ed. 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The art of case study research. Thousand Oaks: Sage Inc. Stern, L. and El-Ansary, A., 1992. Marketing Channels. Englewood Cliffs: Prentice-Hall. Sullivan, A. and Steven, M., 2003. Economics: Principles in action. New York: Pearson Prentice Hall. Veal, A.J., 2005. Business Research Methods: A Managerial Approach. 2nd ed. Frenchs Forest, NSW: Pearson Addison Wesley. Yin, R., 2008. Case stud y research: Design and methods (Applied social research methods). 4th ed. Thousand Oaks: Sage Inc.