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| SPJIMR Newsletter: June - Sep 2009 | Discover Spjimr ~ Newsletter ~ June - Sep2009 |
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Dr. Barua explained how the focus of Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) has evolved from pure cost savings to diverse strategic objectives. He opined that strategic outsourcing, which is characterized by higher levels of business uncertainty and complex coordination involves greater contractual risks compared with transaction outsourcing. He also talked about how the capital markets may not be privy to such information when an outsourcing decision is announced, and hence there may be long-term abnormal returns fromsuch outsourcing decisions. Dr. Barua concluded that outsourcing deals of the 'one-sizefits- all kind' do not work. To make an outsourcing relationship successful, a firms need to understand the governance choices available and customize them keeping in mind the complexity, independence and the strategic importance of the tasks to be outsourced.
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