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Developing Dynamic Outsourcing - Bringing continuous added value to the ABB Full Service partnership

Hedén, Erik; Wedborn, Viggo and Nordahl, Jakob (2008)
Department of Business Administration
Abstract
Executive summary This master thesis was originally based on a specific assignment given to the authors from ABB Full Service, a unit specializing in providing maintenance outsourcing: “How can ABB Full Service expand its offering of providing fundamental maintenance by seamlessly incorporating the business concept with competencies and solutions from other ABB divisions?” The academic issue was developed throughout the thesis, resulting in the following formulation: “From an organizational perspective; how can service providers bring continuous added value to intra-organizational outsourcing partnerships?” Many of the key findings of this thesis are reflected in the issue. The term intra-organizational outsourcing is a proposed addition... (More)
Executive summary This master thesis was originally based on a specific assignment given to the authors from ABB Full Service, a unit specializing in providing maintenance outsourcing: “How can ABB Full Service expand its offering of providing fundamental maintenance by seamlessly incorporating the business concept with competencies and solutions from other ABB divisions?” The academic issue was developed throughout the thesis, resulting in the following formulation: “From an organizational perspective; how can service providers bring continuous added value to intra-organizational outsourcing partnerships?” Many of the key findings of this thesis are reflected in the issue. The term intra-organizational outsourcing is a proposed addition to the terminology in the academic discourse on outsourcing. The definition of the term is: • Where an organization outsources a business process interlinked with the physical operations, requiring the service provider to take over a preexisting unit and its employees.
This is an accurate description of the form of outsourcing that ABB Full Service is engaged in. The authors note that this kind of outsourcing relationship is not sufficiently described in the current theoretical landscape, justifying the addition and definition of a new term. A subset of intra-organizational outsourcing is also added; dynamic outsourcing. This term that is central to this thesis. It describes what ABB Full Service should aim for in their client partnerships. Dynamic outsourcing is defined as: - Where the service provider provides a continuous stream of extended services by incorporating resources and solutions from a broad array of expertise areas through the intra-organizational outsourcing partnership, ensuring a permanent value differential thus eliminating the risk of backsourcing.
Insights and propositions in the thesis concern how to achieve dynamic outsourcing. Solutions are provided through two main themes; competence development and nurturingthe client relationship. Competence development for achieving dynamic outsourcing
Service providers that work with intra-organizational outsourcing must be prepared to handle the cultural integration of the transferred personnel into the service organization. Properly handled, fast benefits can be achieved but it is also important to realize that the complete integrating process takes both time and effort. For an organization to achieve dynamic outsourcing, focus on the management of the organization’s knowledge and competencies is imperative. Expertise and experience needs to be developed and transferred between personnel and units within the organization, and knowledge must also be injected from external sources. By working with these aspects of the organization, service providers can improve the quality and cost effectiveness of their offering and maintain a necessary value differential to show clients the benefits of remaining in the partnership. A key insight is that educational initiatives aimed at relationship building, communication, trust, commitment, and shared benefits is more important than technical competence development in achieving a higher level of service quality.
All hierarchical levels of the organization must be involved in these processes, laterally as well as vertically. Vertical learning initiatives are knowledge sharing between different hierarchical levels. These initiatives are mainly targeted at down-streams benefits, where more experienced and competent staff shares insights with personnel on a lower hierarchical level. However it is noteworthy that important information is relayed upwards in the hierarchy as well through such initiatives; this can be information such as improvement suggestions and identification of potential problem areas. Lateral learning initiatives should be formed between different client sites, exchanging knowledge between staff on all levels, from site managemen (Less)
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@misc{1344572,
  abstract     = {Executive summary This master thesis was originally based on a specific assignment given to the authors from ABB Full Service, a unit specializing in providing maintenance outsourcing: “How can ABB Full Service expand its offering of providing fundamental maintenance by seamlessly incorporating the business concept with competencies and solutions from other ABB divisions?” The academic issue was developed throughout the thesis, resulting in the following formulation: “From an organizational perspective; how can service providers bring continuous added value to intra-organizational outsourcing partnerships?” Many of the key findings of this thesis are reflected in the issue. The term intra-organizational outsourcing is a proposed addition to the terminology in the academic discourse on outsourcing. The definition of the term is: •	Where an organization outsources a business process interlinked with the physical operations, requiring the service provider to take over a preexisting unit and its employees.
This is an accurate description of the form of outsourcing that ABB Full Service is engaged in. The authors note that this kind of outsourcing relationship is not sufficiently described in the current theoretical landscape, justifying the addition and definition of a new term. A subset of intra-organizational outsourcing is also added; dynamic outsourcing. This term that is central to this thesis. It describes what ABB Full Service should aim for in their client partnerships. Dynamic outsourcing is defined as: -	Where the service provider provides a continuous stream of extended services by incorporating resources and solutions from a broad array of expertise areas through the intra-organizational outsourcing partnership, ensuring a permanent value differential thus eliminating the risk of backsourcing.
Insights and propositions in the thesis concern how to achieve dynamic outsourcing. Solutions are provided through two main themes; competence development and nurturingthe client relationship. Competence development for achieving dynamic outsourcing
Service providers that work with intra-organizational outsourcing must be prepared to handle the cultural integration of the transferred personnel into the service organization. Properly handled, fast benefits can be achieved but it is also important to realize that the complete integrating process takes both time and effort. For an organization to achieve dynamic outsourcing, focus on the management of the organization’s knowledge and competencies is imperative. Expertise and experience needs to be developed and transferred between personnel and units within the organization, and knowledge must also be injected from external sources. By working with these aspects of the organization, service providers can improve the quality and cost effectiveness of their offering and maintain a necessary value differential to show clients the benefits of remaining in the partnership. A key insight is that educational initiatives aimed at relationship building, communication, trust, commitment, and shared benefits is more important than technical competence development in achieving a higher level of service quality.
All hierarchical levels of the organization must be involved in these processes, laterally as well as vertically. Vertical learning initiatives are knowledge sharing between different hierarchical levels. These initiatives are mainly targeted at down-streams benefits, where more experienced and competent staff shares insights with personnel on a lower hierarchical level. However it is noteworthy that important information is relayed upwards in the hierarchy as well through such initiatives; this can be information such as improvement suggestions and identification of potential problem areas. Lateral learning initiatives should be formed between different client sites, exchanging knowledge between staff on all levels, from site managemen},
  author       = {Hedén, Erik and Wedborn, Viggo and Nordahl, Jakob},
  keyword      = {Outsourcing,partnership,service,service providers,service suppliers,maintenance,client relationship,business to business relationships,b2b,insourcing,backsourcing,onshoring,intra-organizational outsourcing,virtual outsourcing,dynamic outsourcing,knowledge management,knowledge transfer,learning organization,competence development,knowledge sharing,Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Developing Dynamic Outsourcing - Bringing continuous added value to the ABB Full Service partnership},
  year         = {2008},
}