A Multidimensional Framework for Understanding Outsourcing Arrangements

SUMMARY The growth of outsourcing has resulted in numerous different outsourcing arrangements, ranging from out‐tasking and managed services to business process outsourcing and transformational outsourcing. The growing lexicon of outsourcing terminology has caused confusion for many managers and academicians alike, who tend to view outsourcing as a fixed, discrete event or a simple make‐or‐buy decision. In reality, outsourcing is an umbrella term that includes a range of sourcing options that are external to the firm. Understanding these options, their characteristic differences, and how they serve to meet differing business objectives is the focus of the current research. Based on in‐depth interviews with 19 senior executives experienced in outsourcing, as well as a thorough synthesis of available research, this article provides a framework clarifying the broad spectrum of outsourcing arrangements, and their inherent risks and advantages. Managerial guidance related to outsourcing is also provided.