Outsourcing for Sustainable Performance: Insights from Two Studies on Achieving Innovation through Information Technology and Business Process Outsourcing

Abstract

(1) Background: To obtain sustainable performance through outsourcing, organizations must balance the inherent tension between pursuing cost-saving initiatives (i.e., efficiency) and pursuing innovative initiatives (e.g., developing new products). This study aims to explore this tension by exploring different ways that organizations can pursue both efficiency and innovativeness, through their IT outsourcing (ITO) and business process outsourcing (BPO). (2) Methods: This study utilizes a configurational approach in two inductive studies, both using qualitative comparative analysis (QCA). The first study qualitatively compares 27 firms currently doing ITO, while the sec-ond study compares 60 firms doing either ITO or BPO. (3) Results: Our findings suggest three con-figurations, or combination of conditions, that enable efficiency and innovation through ITO and BPO. For ITO, firms can use a best-of-breed or a mediated multi-outsourcing configuration to enable innovation; however, firms can only use a direct multi-outsourcing configuration to enable innovation through BPO. (4) Conclusions: The study is among the first to explore both ITO and BPO practices that enable innovation and efficiency simultaneously (sustainable performance). In contrast with prior studies, all three aforementioned configurations suggest that having detailed outsourcing contracts is a necessary but not sufficient condition for innovation through outsourcing.