What Has Led to the Change in Custom Jewelry in Last 5 Years

¶ … Change

This study analyzes outsourcing trends in the next decade. The study assesses this by focusing on the past and current trends, problems and issues in outsourcing via semi-structured interviews. Major trends and processes will be revealed and assessed for their relevancy, depth and breadth.

Companies belonging to most industries are very much considered to be the units that are vertically integrated, or so-called usual industrial firms (Stigler, 1951), where activities in all links in value chain have been internally conducted. For example, gasoline of its own is delivered by 7-Eleven and it is also used to make ice and candy, also it had cows for producing milk which it previously used to sell (Gottfredson et al., 2005). At present, it is not delivering gasoline and ice or candy is not being made by it neither does it posses any cows. Contrarily, IBM used to make the computers containing their own CPUs and these were sold with the operating system made by IBM too. These days, people go for the IBM computers having Intel chips along with OS of Microsoft, and all are made by IBM originally. Core business of IBM actually lies in selling services while the computers containing IBM logo mostly are manufactured by some other companies. However the changes haven't taken place overnight. Hence the main thing to consider here is how the point has been reached (Hatonen and Eriksson, 2009; Javalgi, 2009)?

Outsourcing has been described by Corbett in the book "The outsourcing Revolution" (2004) as the phenomenon which is not necessarily new, and that has grown recently, gaining momentum when it comes to volumes and strategy importance for firms' overall success. When we look at developments taking place in their overall strategy then it can be identified that there are three broad phases that overlap but are still distinct: Big Bang era, Bandwagon era, Barrier-less Organizations' era (Hatonen and Eriksson, 2009; Javalgi, 2009).

Big Bang is considered to be the outsourcing's first wave. The origin of the name lies in intensity and the way popularity was gained by strategy. Even though manufacturing executives used the outsourcing concept in the end of 1970s (Corbett, 2004), but the term had its official introduction just after one decade. Still, just after one decade Harvard Business review referred it to be one great ideas of management throughout the last century Sibbet, 1997). When we talk about outsourcing's history as the corporate strategy then its beginning is marked in the early 1950s (Dibbers er al., 2004; Quinn and Hilmer, 1994), and it turned out to be a viable option in 1980s, when organizations started to frame out the call centers along with other operations that were service-oriented (Lacity and Hirchheim, 1993). During outsourcing's first wave, which lasted till late 1980s, non-key business processes were outsourced by companies for cutting down the operational costs. New catchword "outsourcing" became the tool for increasing the efficiency of the organizations as part of the economic units in order to maximize profit. Outsourcing majorly took place at domestic level and relationships had been managed very closely, relying on the contracts the company already had (Hatonen and Eriksson, 2009; Javalgi, 2009).

In early 1990s momentum was really gained by outsourcing (Morgan, 1999). This was the time when the concept of outsourcing wasn't even recognized by Oxford English Dictionary (which is one prestigious asset), but still the practice started to gain momentum (see Oxford English Dictionary 1990). All positive experiences of the starting outsourcing cases caused other companies come in to bandwagon (Lacity and Hirschheim, 1993), and this started new era in the history of outsourcing- the Bandwagon era. This was the time when one new approach to management was introduced by an influential article titled "The core competence of the corporation," written by Hamel and Prahalad (1990), for replacing the thinking of strategic business unit (SBU). By this the managers had to rethink the competitive edge that they had. This resulted in companies to start the outsourcing functions which didn't fall in their expertise area. Cost efficiency wasn't the only objective of outsourcing; rather external skills were sought out by the companies along with knowledge and competencies for providing to extra difficult and strategically significant organizational processes (Hatonen and Eriksson, 2009; Javalgi, 2009).

The new catchword "strategic outsourcing" then came into existence (Alexander and Young, 1996b; Quinn and Hilmer, 1994). Contrary to the traditional ways of outsourcing, the functions that were more strategic were now outsourced and hence managing the relations at an arm's length turned out to be insufficient. This resulted in the initiation of making closer relationships with the vendors by the firms. The boundaries were stretched by the organizations for the sake of gaining competitive edge by utilizing outsourcing. Popularity was gained by the management ideology to focus on the core competence, and outsourcing the rest (e.g. Porter, 1996) in different industries. Even though the resources as well as the knowledge base were searched primarily from the domestic markets, in the beginning of 1990s firms started to consider the resource pools of international level to be accessible (Hatonen and Eriksson, 2009; Javalgi, 2009).

Purpose of the study

The purpose of the study is to analyze Outsourcing Trends in the Next Decade. The study will analyze this by focusing on the past and current trends, problems and issues in outsourcing via semi-structured interviews.

Significance of the Study

On a general level, this study will carry significant value for outsourcing companies around the world since this research will thoroughly cover past and present outsourcing trends.

1) The findings of this study will provide valuable information for the policy makers both in the top management of these companies to make effective decisions to support and fund effective outsourcing programs.

2) This study and its findings will become an addition to and update of the international research on outsourcing.

Chapter 2: Literature Review

"Transformational outsourcing," 21st century's new catchword, aims to create latest radical business models by which the firms can have competitive edge and can change the rules to operate in the industry (Engardio, 2006).

When we talk about what's there in transformational outsourcing then while the focus is on sweating the assets in "traditional outsourcing," and the aim of the "strategic outsourcing" is to acquire the capabilities lacked by the firm, "transformational outsourcing" believed in changing the entire scenario, i.e. To target new enterprises which are adaptive (Linder, 2004; Linder et al.,2002; Mazzawi, 2002). According to this, earlier outsourcing was considered to be the tool used to streamline the internal operations, now it has turned into the tool used to transform firms into some organizational forms that are flexible whereas it has replaced the role of hierarchy which is tightly integrated into the organizational actors' networks that are loosely coupled (see Schilling and Steesma, 2001). Even though, several years back, it was concluded by Hennart (1982) that faster adaptation is allowed by internal organization to the change as changing the internal transactions doesn't require it to obtain all parties to agree to transaction, the view these days is very much opposite. Outsourcing has now reached the stage where operational flexibility might be achieved by the firms and they don't have to incur costs that have association with bureaucracy (Hatonen and Eriksson, 2009; Javalgi, 2009).

As far as the management perspective is concerned, collaboration, cooperation and co-development have now been the main issues to manage the outsourcing relations; and all of these enable the decomposition of the activities that are creative-in-nature and knowledge intensive. It has resulted in forcing the management executives creating competencies in portfolios' management of supplier relations that are value-adding. It appears as if the future competitive advantage lies in flexibility which one can achieve via tight focus on operations and leveraging the outer core competencies beyond this area of focus (e.g. Quinn, 1999) Table 1 given at the end summarizes all the above discussion (Hatonen and Eriksson, 2009; Javalgi, 2009).

Theoretical and historical background of outsourcing studies

This chapter provides historical perspective of the development as well as evolution of outsourcing research with regards to the theory and concepts. After having a look at the evolution of the concept and definition of outsourcing, research questions have been discussed that led the previous outsourcing research. Lastly, core theories to examine the phenomenon as well as the practices are discussed (Hatonen and Eriksson, 2009; Javalgi, 2009).

How the outsourcing concept grew and developed

All the new concepts should be made for describing the phenomenon or it can be some modification in the existing one to make it accurate, rather than overriding the existing ones. A concept, according to the definition, is the abstraction which represents a particular phenomenon and the major purposes that it demonstrates for introducing some perspective - a way to look at the empirical phenomenon (Frankfor-Nachmias and Nachmias, 1992). But what value can outsourcing deliver; has the definition been accurate and are there some previous concepts overridden (Hatonen and Eriksson, 2009; Javalgi, 2009)?

The idea of outsourcing is very vast and diverse. There are a number of forms of outsourcing. The important forms of outsourcing are information technology outsourcing (ITO), business process outsourcing (BPO) and human resources outsourcing (HRO). The concept of outsourcing reveals a number of research steams. The idea of outsourcing is still unchanged due to scientific diversity. Basically outsourcing and mainly offshore outsourcing are known as noticeable strategies (Harland et al., 2005; Jahns et al., 2006; see also Paju, 2007). Idea of outsourcing makes cause of discrepancy between the researcher and practitioner. Primarily, the scholars (Domberger, 1998; Kern et al., 2002; Ring and Van De Ven, 1992) observe that outsourcing is a development and natural continuation to Williamson's (1975, 1979, and 1981) researches and others who work on contract and the transaction cost economics. In his research, Williamson vindicated that it should be sign for a potential contract if using market resulted transaction cost are lower than performing activity internally (Hatonen and Eriksson, 2009; Javalgi, 2009).

The same ideas were demonstrated by Coase (1937). He said that transactions organized within business when the market usage cost is higher than the cost for management of transactions. As we know that transaction costs play a critical role in marketing. Basically transaction costs can be defined as the cost that is incurred when buying or selling securities. These include brokers' commissions and spreads. The studies conducted by Williamson and Coase have also given ideas on the economics of the transaction cost. All these ideas were seen similar to outsourcing ideas. There are different researchers who discussed the same burning issues. In the 1972 Hymer also elaborates the merits and demerits of internalization and externalization. He showed that externalization opposes the internalization. According to Newton and Strange (2006, 190), Hymer said that the international production could now take place with the business and overcome the independently owned firms without considering ownership as the tool for control. There is a contrast between transaction costs approach and the phenomenon of internalization. And he observed that the transfer production was the means of extending instead of giving up the control over production (Newton and Strange, 2006, 181). Similarly in 1972 Richardson discussed the aspects of co-operating and coordination while using market. He also explained the market mechanisms which opposed the markets and hierarchy contradiction of transaction costs approach. While we are discussing about the garment industry, transferring of production tasks to some other companies is known as putting-out (cf. Landes, 1998). Basically all these ideas and concepts like contracting out, transaction costs and putting -out and all these approaches lead us to whether company buys or makes products (Hatonen and Eriksson, 2009; Javalgi, 2009).

In spite of all of these approaches and developments in transactions costs, some scholars (Embleton and Wright, 1998; Venkatraman and Loh, 1992) elucidate that outsourcing and contracted out both are deferent terminologies. Outsourcing refers to long-term with high degree of risk sharing and contracted out bases on work done by the outside company. In case of transaction cost, it takes into consideration buying in terms of arms-length transactions. Outsourcing also considers the various inter-organizational relations. It was argued by Morgan (for example, Morgan, 1999) that outsourcing strategies were considered as contracting out and were based on cost driven motives. With the advancement and introduction of different theories, company strategies tend to be outsourced. The relationships are moved away from the arm length arrangements. All of these ideas and concepts and theories are not becoming ancient but it has become common practice to avoid from the complications. In short the theory of transaction cost seems to be an elementary theory at the back of outsourcing (Hatonen and Eriksson, 2009; Javalgi, 2009).

But the real question is how it is defined today? The current business literature has defined outsourcing as the term which comprises of the use of external sources for a process which was previously done internally. The definition can be viewed with two different perspectives one is product and the other one is process. From the perspective of process, according to Barthelemy (2003, 87), outsourcing might be seen as turning-over complete or partial activity, previously carried out in an organization, to an outside vendor. According to the production perspective, Billington and Ellram (2001, p. 16) for instance, have defined outsourcing in terms of transferring the finished goods' production which had been executed internally to an external party. Not only the product of an industry or organization is outsourced, the management responsibilities are also outsourced. Although the approach is somewhat different for the outsourcing phenomenon defined in the two studies, irrespective both of them defined outsourcing, with slightly different characteristics. The denominator, which is common, might be considered as the primary issue due to the fact that it entails the transfer of ownership of some activity. However, the thing which varies is the extent to which it is transferred and this is the primary reason that encouraged the researchers to refine as well as extend this definition of outsourcing, for example, strategic as well as transformational outsourcing (Hatonen and Eriksson, 2009; Javalgi, 2009).

The fundamental queries in outsourcing studies

First of all, going back to theory of transaction cost, researchers across different disciplines have shown their interest in finding the answer about why firms look to purchase rather than manufacturing. (See Fig. 1 for summary of research questions). As discussed earlier, the earlier cost did put lights on the motive of outsourcing and have now become more comprehensive. Based on the theory disciplines e.g., Transaction cost theory (Coase, 1937; Williamson, 1975), the type of view according to the resources (see Wernerfelt, 1984; Barney, 1991) and based on theories of organizations (see Hymer, 1976; Caves, 1971), earlier researchers have found three motives of outsourcing. First motive is financial savings, which includes lowering the price of operational costs, controlling finances and looking forward for some profitable business. Next are the areas of improvement and core competence values that need to be checked: i.e. 1) Gaining more flexibility in the internal re-organization, to complete the projects well in time; 2) Lessen the time to reach market; 3) Have a more flexible workforce, and 4) Focus on the business must be sharpened. Lastly, comes capability enhancements that include gaining access to those resources that are not available, getting access to skillful labor, improvement in the quality of services, acquiring innovations that are already available and keeping up the pace with new technology (Cordon and Heikkila, 2002; Kakabadse and Kakabadse, 2002; Duhamel and Quelin, 2003).

Even though there have been researches conducted to find out why the companies outsource, in the recent years it has been seen that the operations have now become more tough to handle and new issues have also become clearer than before. Hence, this question that used to be amongst important questions before has now become worthless and now there are some other questions that need to be answered (Hatonen and Eriksson, 2009; Javalgi, 2009).

"What to outsource?" is the most important question nowadays among researchers as opposed to why should one outsource (E.g. Harland et al., 2005). The question can also be approached by the perspective cost of transaction. The idea of core competence was an introduction of this (Hamel and Prahalad, 1990, 1994) that started the discussion about this fact and it made the researchers and thinkers and practitioners rethink the activities related to outsourcing. In addition to this, Outsourcing was not only taken as the way of reducing the finances but to take advantage from the skills that are not available inside the firm which makes outsourcing a phenomenon beyond the transaction cost analysis. In start of 1990s the transaction cost analysis' static nature was discussed against outsourcing. For example, a study done by Takeuchi and Nonaka (1994) gave the basic knowledge of outsourcing as a theory, which was often linked with the specifications of assets of a company, enabling it to be accepted all over the globe. There are still some conspiracies among the researchers regarding the question of "what" should be outsourced. To argue is, for example, the literature cannot fully satisfy the fact that whether or not outsourcing reaches its core value as expected. Furthermore, public policy wants to know what is to be outsourced, and at the end, the extents up to which things that can be outsourced deserve more attention (Harland et al., 2005). Therefore, "What to outsource?" remains amongst the most researched question (Hatonen and Eriksson, 2009; Javalgi, 2009).

After this discussion, a question rose about the placement of outsourcing (i.e. where one should outsource) in a researcher's mind, in the beginning of 1990s, especially between the strategic management and IB researchers. The diminishing of the national boundaries and the improvement in communication links enabled to take advantage of external resource markets on the worldwide scale. The most discussed topics between practitioner, researchers and stakeholder group is the offshore outsourcing's phenomenon. This off shore outsourcing became very popular in the mid of 1990s. Ramamurti in 2004 asserts that offshore outsourcing is amongst the increasing topics of discussion in business research. But the research community did not pay a great attention to it initially. There are many questions related to offshore outsourcing that are still under-researched. Now the main issue arising is the decision of the end-location for outsourced products and businesses (Bunyaratavej et al., 2007; Doh, 2005; Mudambi and Graf, 2005; Kotabe and Murray, 2004).

The question regarding "how to outsource" is also linked to the relationship that exists between the provider and outsourcer. Therefore, the relationship of the management and the outsourcing company and its overall dynamics are quite important issues that need to be discussed in future studies. Harland et al. (2005) recognized managing the relationship between the provider and the outsourcer is amongst the important themes in outsourcing (nsinga and Werle, 2000).

Future development is one aspect that could be a likely focus for future in order to study the facts of the aforementioned questions and also the combination of different questions. It can bring new insights to understand the outsourcing strategy by combining different questions, for example, to study process in international circumstances (Hatonen and Eriksson, 2009; Javalgi, 2009).

The theoretical foundations and justifications for outsourcing

The researchers have incorporated numerous notional regulations in inquiring to elucidate the diverse facets of outsourcing, with the experience gained with the passage of time regarding this intricate fact. Researchers are propelled to implement an inclusive technique by its exceedingly complicated characteristic, and deject them to implement a solitary notional technique. The regulation based assumptions and assumption advancements that are implemented in elucidating the diverse essential issues regarding outsourcing study, are represented in figure. 1. It places the fundamental assumption alongside the recognized essential issues of the contemporary study like -- where, how, what, and why -- which were discovered as the steering issues in contemporary outsourcing study (Hatonen and Eriksson, 2009; Javalgi, 2009).

As mentioned previously, the implementation of outsourcing undoubtedly has its pedigree in the externalization and internalization dichotomy (also Hymer, 1972) and in transaction cost economics (TCE) (for instance, Coase, 1937; Williamson, 1975, view also Buckley and Lessard, 2005). Coase mentioned the reason for existence of organization was their capability to manage some operations at a lesser rate than the prevailing market price, in 1937. Williamson (1975, 1979) mentioned that if by means of markets a transaction cost lesser than that of in-house production then it should be outsourced so that overall cost is reduced. This concept has been the major dogma for the issues regarding the organizations' outsourcing decision. The decision of outsourcing also depends largely on the organization's ability to provide its customer a unique product or service as compared to its competitor. This usually leads to the proprietary benefits, which additionally originate from the organization assumptions (Southard, 1931; Dunning, 1958; Hymer, 1960; Caves, 1971).

Furthermore, as it is mentioned previously that the assumption of transaction cost has lost some significance because, outsourced process refers to task accomplished by an external entity on a task-by-task foundation, hence cost primarily serves as the assessment measure (e.g., Loh and Venkatraman, 1992). Consequently this assumption as well as the internalization assumption (Buckley and Casson, 1976) is not capable to elucidate the contemporary patterns in the progression of outsourcing. Along with reducing the costs which are generated due to the internal actions, this procedure serves as a way of gaining proficiency and comprehension from external entities; obtaining finer resources through resource-searching tactic. Hence, it should be scrutinized in the perspective of resource-based theories (RBV) of the company (Penrose, 1958; Wernerfelt, 1984; Barney, 1991). Reserves are scrupulously delineated (Wernerfelt, 1989), and inculcate concrete and indefinable assets and abilities (Hatonen and Eriksson, 2009; Javalgi, 2009).

The current concept of transformational outsourcing is aligned with RBV and TCE, and hence is not directed towards cost reduction or resource procurement which is not present within the organization: the focal point is on the formation of novel organization structures which is in contrast to the essence of these theories, hence proving them ineffective in this perspective. As the objective of transformational outsourcing is to generate an acclimatized, exemplary organization, researchers are evaluating exemplary systems assumptions as a probable assumption foundation. They are using the studies of major system theorists like Alexander (1964) and Simon (1962) as the support for their notions. Furthermore, the argument that transformational outsourcing is lead by phases of gradually increased erudition (e.g., Morgan, 2003) proposes the implementation of advancement and erudition conjectures (e.g., Nelson and Winter, 1982) to confine the diverse facets of this synchronized fact (Hatonen and Eriksson, 2009; Javalgi, 2009).

The prime objective of incorporating outsourcing is to attain the position and appearance of a virtual business entity, which benefits the organization in eliminating the lags due to operational hazards. The discovery for this virtual entity has instigated the functioning of organizations like 'virtual organizations' (e.g., Davidow and Malone, 1992), 'modular organizations' (e.g., Tully, 1993), 'shamrock organizations' (e.g., Morgan, 2003), 'federated organizations' (Child and Faulkner, 1998), 'hollow corporation' (e.g., Pastin and Harrison, 1987), 'boundary-less or barrier-less organizations' (e.g., Ashkenas et al., 1995), and 'network organizations' (e.g., Miles and Snow, 1986). All of these phrases are depicting the same sense of firmly incorporated hierarchy being superseded by slackly conjoined systems of organizational peers (Schilling and Steensma, 2001). As mentioned by Buckley and Lessard (2005) the inspiration of virtual organizations is the resultant from the assumptions of internalization theory, organization theory, resource-based strategies as well as theories revolving around the phenomenon of transaction cost. Nowadays, the predicament lies in the judgment of organization of selecting a system pertaining of top-notch contractor, which is the core essence of transformational outsourcing. Hence, it can be stated that network theory (Johanson and Mattson, 1988; Hakansson and Johanson, 1992) has augmented the development of this prolonged debated issue (Hatonen and Eriksson, 2009; Javalgi, 2009).

Along with the presence of internalization theory and resource-based theory, another theory is also needed to elucidate how foreign outsourcing can have it influence, hence elongating the analysis of economical tasks from a local to a foreign origination. Researchers are analyzing the geographical-location theory (Weber, 1958; Vernon, 1974) and economic geography (Ohlin, 1933) in order to deduce the factors on which offshore outsourcing will be conducted, which will eventually be of great use. The implementation of Dunning's (1980, 1988, 2000) eclectic paradigm have been discerned by numerous authors (Doh, 2005; Graf and Mudambi, 2005; Palvia, 2004), this paradigm coalesce the geographical-location theory and internalization theory. In line with the paradigm proposed by Dunning specifies that international manufacturing is warranted in the presence of: internalization inducement, demography-specific, and proprietary-specific rewards. In the condition of foreign outsourcing, the internalization inducement is absent while the demography and proprietary rewards are present (cf. Hymer, 1972). Furthermore, current study on foreign outsourcing has depicted how the process of outsourcing associated with internationalization (e.g., Maskell et al., 2005) might incorporate essential properties with the previous representations, which emphasized on the augmented educational and hazard evasion (cf. Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977; Luostarinen, 1979). This implies the necessity for abstract and concrete evidence with pedigree in the theories of development and knowledge (e.g., Nelson and Winter, 1982) in determination of outsourcing demography (Hatonen and Eriksson, 2009; Javalgi, 2009).

A contemporary theory which signifies the competence-based view, when going for a decision of outsourcing and emphasizes that the core competencies should be protected in such decisions (Hamel and Prahalad, 1990). The resource-based assumption of an organization is considered the origin of the knowledge-based or competence-based opinion (e.g., Grant, 1996). Proprietary rewards explicate the organization's manufacturing of a particular commodity and incorporate every minute rationale regarding its differentiating competence than that of its opponent; it can also be presumed as the essential reason for its existence. Hence, the proprietary rewards are originated from organizational theories (Southard, 1931; Dunning, 1958; Hymer, 1960; Caves, 1971, 1974); in addition they are influenced by evolutionary theories due to their comprehensive hold on the matter of organization competence. The theory of SBU (strategic business unit) has been substituted with the core competency, which was proposed by Hamel and Prahalad (1990, 1994). Likewise, the knowledge-based analysis (e.g., Grant, 1996) commences an initiative about the presence and character of the organization that stresses on the functions of knowledge. Knowledge in its core essence is the most crucial component for an organization. There are diverse kinds of knowledge present and these differ in their ability of transmission; implicit knowledge (expertise, experience, technical abilities) is evident only in the implementation and transferring from one individual. It requires a strenuous period by means of training and is also quiet expensive; overt knowledge can lucidly and effectively be transmitted between peers (Kogut and Zander, 1993; Nonaka and Takeuchi, 1994). As stated previously, knowledge and competence foundations are observed as the extension of resource-based analysis (Barney, 1991; Wernerfelt, 1984).

Lastly, Insinga and Werle (2000) state that, the most essential query at the back of an outsourcing study based on the tasks which are outsourced is associated with the fitting state of affiliation to prosper. Numerous theories, like network theory, theories of development and erudition, the resource-based analysis, and transaction cost theory are formulated on the necessity to elucidate the inter-organizational affairs, majority of these nowadays are broadened structures and markets into associations, these are referred to as quasi-relationships or quasi-integration (e.g., Thorelli, 1986). One of the essential emphases made by researchers is on the administration of an outsourcing relation; they are attempting to elicit conclusions on the principal-agent (agency) theory and other diverse relationship theories (Eisenhardt, 1989, see also Logan, 2000). The synchronization in outsourcing stances are facilitated through implanted modularity; this has been deduced by the assessment of the earlier studies focusing on modular structures (e.g., Baldwin and Clark, 1997), hence enabling to infer the probable discrepancies in the administration of outsourcing associations. The origin of this particular methodology is from Simon's (1962) and Alexander's (1964) systems theory (Hatonen and Eriksson, 2009; Javalgi, 2009).

Through this theoretical synopsis as well as the illustration of Figure 1, it has been deduced that the abstract setting of the diverse facets of an outsourcing event is quite flexible. Hence, implementing a lone theoretical viewpoint will eventually direct towards an effortless investigation, whilst the essential cause of such a study is to tackle the four queries of where, how, what, and when. This requires a conjoined examination (Hatonen and Eriksson, 2009; Javalgi, 2009).

The event and perception about the outsourcing which the researchers have inferred and proposed has been altered due to the prevailing application of the outsourcing procedures. As mentioned previously, these advancements in the tactics have paved the way for affluent and assorted theoretical viewpoints for the contemporary outsourcing trends, and have compelled the researchers to tackle numerous theoretical viewpoints and regions when encountering outsourcing at present. Amidst, the tactic is persistently progressing posing novel tests for the researchers and decision-takers as well. The subsequent section demonstrates a few novel executive matters and tests which might guide the researchers to implement new abstract viewpoints when evaluating the probable upcoming matters related to outsourcing (Hatonen and Eriksson, 2009; Javalgi, 2009).

Studies that have predicted outsourcing of the future

The future is always unpredictable, and as mentioned in the preceding sections of this paper the advancement and change which has been occurred in the outsourcing field are of varying nature, along with these amendments the theoretical and abstract viewpoints which have been implemented in order to depict such amendments have also changed a lot. In this section we will argue about those probable courses on which the outsourcing trend is currently progressing (Hatonen and Eriksson, 2009; Javalgi, 2009).

Through our investigation we realized that the management's concern is on the effectiveness of the outsourcing event. In accordance, the most significant cause which was extracted from an interview of an executive was the effectiveness of the outsourcing event. Below is the explanation from a sourcing manager from a middle-sized technology organization (Hatonen and Eriksson, 2009; Javalgi, 2009):

Talking from the perspective of a researcher, what really amazes me is that why some faces failure and some faces success in their outsourcing initiatives (Hatonen and Eriksson, 2009; Javalgi, 2009)

It can be said that validity is there in this question, and numerous research disciplines have presented this research question too (see for instance, Peng, 2004). Many researches have been conducted, and the literature reviews discuss that how the firms can be affected by outsourcing. Emphasis is being laid on conducting studies in future too (Gilley and Rasheed, 2000; Mol et al., 2004; Quelin and Duhamel, 2003). One of the problems that have been identified as integral to the issue is the evaluation of success that has been achieved in outsourcing. No such study has been conducted in detail that could answer this question (Harland et al., 2005). Several criteria can be established to evaluate performance; however, finding the appropriate and pertinent criteria is a major concern. Moreover, when performance criteria are being selected various concerns must be addressed too (Hatonen and Eriksson, 2009; Javalgi, 2009).

Nonetheless, no single factor is responsible for altering or determining the performance of outsourcing. How the entire process of outsourcing is managed, the management doing it, the assessment of activities that would be outsourced to on-going management, are the factors that determine the success or failure of outsourcing initiative. Now managers are required to have some competencies in outsourcing as well since this development in recent era has changed the way companies create strategies. The modern era is full of latest outsourcing techniques, which would be discussed in our later section, so that it can serve as a meaningful insight to them (Hatonen and Eriksson, 2009; Javalgi, 2009).

Categorization of outsourcing trends in the manufacturing and service sectors

No one would disagree when it is said that industrialization greatly depends on the success of the manufacturing sector. The global economy regarded this as an indispensable segment till 1980s; however, this segment is now experiencing essential changes that would result in technological advancements and the creation of markets that would be attributed to cheap labor. It is apparent from the records that in the 1980s and 1990s manufacturing concerns started shifting towards those economies that offered cheap labor. Retail sector and automobile industry witnessed significant changes when the manufacturing segment was taking new shape, and this created a basis for the formation of "global sourcing model" (Prasad and Prasad, 2007). Many multinationals, like Wal-Mart, adopted this global outsourcing model and started making the most of those markets that offered cheap labor. Hence, now the suppliers that were sitting in United States were competing in a totally new environment and most of their competitors were from outside the United States, particularly those regions that possessed low factor endowments, such as low cost labor. China, India, and other countries were now giving a tough to competition to U.S. suppliers, and that is why the suppliers located in United States also decided to outsource their business, or in other words accept the model of offshoring (Prasad and Prasad, 2007).

The three chief differences that exist between service and manufacturing offshore outsourcing have been identified by Stack and Downing (2005). First of all, it is not easy to deliver manufactured items across borders at low costs since the trading community of the world has not been successful for a very long period of time in decreasing tariffs imposed on goods being imported, whereas, the developments in information and communication technology has made it possible for the service industries to deliver their services beyond the borders at a comparatively lower cost. Secondly, Brazil, China, and India serves as major hub of outsourcing as the developed countries can find their requirements, which are workers who can speak English and are skilled, in these regions. Thirdly, workers engaged in manufacturing sector were not expected to have either technological capabilities or education from a university; however, higher education is a requirement in service sector (Hatonen and Eriksson, 2009; Javalgi, 2009).

Strategies of outsourcing adopted by manufacturing segment and nature of these strategies have been analyzed by Kotabe and Zhao (2002) in their article. A total of 319 firms in China that are actually owned by overseas companies were used to collect the data for survey. This survey did not emphasize on the corporate level but on foreign subsidiary level. The survey data was analyzed, and concluded that there are five strategies for outsourcing. They are complex sourcing, local sourcing, offshore manufacturing, offshore sourcing, and market access. This research revolves around manufacturing segment, but, researchers consider that their findings can be used for future researches as it would help in developing a theory that would integrate subsidiary strategy by taking into account various dimensions of entry, business, and sourcing strategies (Hatonen and Eriksson, 2009; Javalgi, 2009).

Now the services are not considered as side-line activities that support manufacturing industry, rather as an integral part of the globalized corporate world. The production and deliverance of services beyond the restrictions of border have been greatly influenced by the striking shift that has occurred from a traditional economy based on manufacturing towards an economy that is based on services (Javalgi and White, 2002). The development of taxonomy of offshoring of services has now become very important as the offshoring of services has been increasing at a drastic rate. The taxonomy of outsourcing types has been discussed in the following section (Hatonen and Eriksson, 2009; Javalgi, 2009).

H1: If the overall tariff rates on imported goods decrease, then the offshore outsourcing phenomenon would be used more often by companies.

Outsourcing strategies in the service sectors

The services and goods are differentiated by the marketers on the basis of 4 features, which are perishability, heterogeneity, intangibility, and inseparability (Parasuraman et al., 1983). The significance of services' generation and consumption, quality of service, and how the communication with customers is attributed to different aspects, are highlighted by these differences. Ownership and location aspects are visible in services outsourcing, along with the finished goods or components' procurement (Kotabe et al., 1998). Locational aspect defines the suppliers in terms of overseas vs. domestic. Overseas sources (like emerging markets) are not located in the same country, whereas, buying firm and domestic sources dwell in the same country. When we talk about internal vs. external sourcing, we are actually talking about ownership aspect of global sourcing. When contracts are made with independent suppliers, it is termed as external sourcing. When the procurement is carried out within the organization (like a subsidiary from parent company, parent company from subsidiary, or with other subsidiaries), then it is termed as internal sourcing (Hatonen and Eriksson, 2009; Javalgi, 2009).

Kedia and Lahiri (2007) hav discussed three outsourcing levels, keeping in view IOS (International Outsourcing of Services), which are tactical, strategic, and transformation. Figure. 1 shows these three kinds. Various objectives of business, such as reducing cost so that company may enhance the value proposition, are addressed by these three levels. It is depicted in Figure. 1 that tactical type of outsourcing largely focuses in the operational cost reduction and this level has low participation of overseas environment provider with the client. Traditional outsourcing includes tactical outsourcing that lays emphasis on the comparison of cost, maker-buyer decision, and the business process execution on the basis of current procedures and rules. TCE framework explains the relationship that exists in between the partner and outsourcing client, which is also a part of tactical outsourcing (Kedia and Lahiri, 2007). TCE considers that clients cannot think beyond their decision-making ability and rational thinking, which in turns hinders the development of strategic relationships with the providers that are long-term in nature (Kedia and Lahiri, 2007).

When we talk about outsourcing strategy in nature, we focus on the wisdom currently available regarding the resources that would be required not only to achieve but maintain competitive advantage too. When organization and the resources possessed by the organization are redefined, this process also includes strategic outsourcing. The purpose is to free the management from refocusing on those activities that are considered as integral to business. There are two basic premises on which the value of firm's resources are dependent. Firstly, the strategy of firm for developing direction is aided by these strategies. Secondly, competitive advantages are rooted in them, which further leads to better performance (Grant, 1991). A great stress is being laid by this thinking on those ways that could help in developing competitive advantage, along with those essential components that are vital in the survival of the company in an environment which is becoming competitive with the passage of time (Barney, 1991). As mentioned in RBV theory, which has been discussed earlier, non-substitutability, inimitability, rareness, and value are those significant characteristics, which if possessed by the firm's resources, can help a firm in sustaining competitive advantage. Hence, it is very important for the service providers, considered as experts by the clients in their functions, to have all the resources and capabilities at their disposal in order to produce the service in a borderless economy and achieve competitive advantage (Kedia and Lahiri, 2007).

Figure 1 depicts the third type of outsourcing model, which is also known as a transformational outsourcing. Competitive advantage may be achieved in long-run by the firm which is laying emphasis on transformational offshore outsourcing, whereas, firms emphasizing on strategic outsourcing (core competencies) and tactical outsourcing (cost reduction) may not be able to do it so quickly. The advantages of transformational outsourcing are relatively higher value generation for firm, building competitive advantage that can be sustained, and retention of control by the firm. The result of applying transformational offshore outsourcing is value added activities, more innovation (Li et al., 2008), suppliers hunt, looking for technologies that are cost effective, particularly markets that are developing and emerging (Li et al., 2008). Tactical or conventional outsourcing does not possess higher level of involvement or risks as that in the transformational and strategic outsourcing (view intensity arrow provided in Table 2).

H2: If the companies design a transformational strategy of outsourcing, then they may achieve competitive advantage in the long run and thus increase their outsourcing activities.

H3: If companies can sustain quality delivery of services, then they may achieve competitive advantage in the long run and thus increase their outsourcing activities.

Outsourcing decisions

Decisions for outsourcing are primarily based on various determinants, decision variables and various theories. Outsourcing decisions work according to the sector and industry. Every industry activities are different and so are there outsourcing decisions. As Mentioned by Kotabe et al. (1998), the sourcing activities of service industries and manufacturing industries are same. Manufacturing activities comprise of intellectual resources, mobility of capital, access to the market, and labor cost differentials. Discussed by taxonomy there are three types of offshore outsourcing called as; people based/customer contact services, information technology and IT-enabled services and knowledge-based services. All of these outsourcing service types are distinguished from each other and are discussed below independently (Hatonen and Eriksson, 2009; Javalgi, 2009):

Offshore outsourcing type: people-based/customer contact services

In today's era with high competitive market position all firms are competing on various factors. Most significant among them is the cost reduction. The firms in U.S. are striving to cut their costs and at the same time producing reasonable quality. This situation has caused the economy to hold up the offshore outsourcing business model. U.S. firms are facing complexity in developing outsourcing strategy with maintaining the value of their business. While, considering outsourcing the important factor is of cost and it stimulates the company to look forward, economies are determined to get the best possible outcomes with optimum talent, expertise and capabilities. With this approach emerging markets like Brazil, China, and India are becoming successful to produce at lower cost as compared to the advanced economies. Some potentially sound markets present overseas businesses large financial incentives to establish technical services, R&D and core and non-core business functions (Mehlman, 2003). Firms can make an effective use of such resources. They can send India the tasks at which India has got command like data processing, customer-service structures including the call center staffing, claims departments, as well as the data services and/or payroll departments (Hatonen and Eriksson, 2009; Javalgi, 2009).

Businesses are becoming very innovative and all business owners are looking for the best possible skilled workers who can perform remarkable at low cost. It excites the businesses to generate various tasks at low cost. Companies who follow tactical outsourcing have seen major reductions in cost. Reduction in cost has been observed mainly in non-core activities of the companies. In call centers of Malaysia, Indonesia, China, Philippines, and India (being noncore part of the business) have shown reduction in cost. Table 2 shows that areas, like back office services, R&D Engineering, financial services, software development, information technology, call centers, are becoming exciting and beneficial destinations for outsourcing. Companies are earning large number of revenues by outsourcing and it is seen that over five billion dollars has been earned as revenues by the companies of United States. Among the countries in table 3 India seems to be specialized for outsourcing and then China and Philippines (Hatonen and Eriksson, 2009; Javalgi, 2009).

H4: If the reduced costs of production encourage more outsourcing, then there may be a rise in outsourcing activities in the developing countries.

Offshore outsourcing kind: Information Technology (IT)

According to the records of past ten years it has been observed that prices of computing and telecommunications have declined at a high pace and there has been a rise in innovation of computing and telecommunications. Today's global world has allowed interconnecting with other firms across the globe and getting the benefit of low-cost services. Sector of information technology is a rapidly growing business across the world. The global IT enabled services are being used by companies in different countries. Lewin and Peeters (2006) in their study state that U.S. companies are being provided by various advancements of IT such as relation of tariffs and export control by the Indian government (Hatonen and Eriksson, 2009; Javalgi, 2009).

Business Process outsourcing is being used by various U.S. corporations after realizing the savings been made out of it and ease to access resources. Business Process Outsourcing is also being used in the areas of help desk, data entry, claim processing, finance and accounting by insurance firms, credit card companies, banks, and airlines. In emerging markets the multinational companies of various sectors like banking industry, IT industry and management consulting industry have shifted their back office functions of accounting, data and processing to low wage offshore locations. Table 3 shows that the leading companies of IT such as IBM, HP and HD are earning incredible revenues (Hatonen and Eriksson, 2009; Javalgi, 2009).

Couto et al. (2006) conducted a study on offshoring business functions. The study was conducted location wise and portrays that India is running its business functions attractively. Back office functions, product development, IT activities, contact centers are performed very well by India. Moreover, India has edge over various Asian markets for business functions. Philippines and china are however becoming close rival of India; Philippians being capable for noteworthy back office functions, administrative functions and for contact centers; China being competent and strong enough at procurement and product development areas. According to this study India might be facing strong competition in near future (Hatonen and Eriksson, 2009; Javalgi, 2009).

H5: If quality of service is met with low cost of production in developing countries, then the developing countries will experience higher outsourcing opportunities

Outsourcing type: knowledge-founded services

Times have changed. Companies are keeping their focus on knowledge-based services. Now off shoring is not limited to BPO services but Research and development, design and technology, and engineering are taken into account. The employees of the companies are spread around various countries like India, China, Ireland, Russia and Philippines. Technology is transformed and engineers and scientist are also becoming more innovative and are aware of reducing the boundaries for work. According to Stack and Downing (2005) there is an Indian company named as Evalueserve, it offer the services as "knowledge process outsourcing" and it keeps itself away from transaction processing tasks and also reduces its association in strategic business research as stated by the Nicholson and his colleagues (Nicholson et al., 2006).

It is brought under consideration by Couto et al. (2006) that getting the qualified staff and personnel for companies to go offshore is very important. U.S. can retain number of well educated, well trained and technically and scientifically sound middle management at a reduced cost which does not necessarily mean that U.S. is economically well established. It is suggested in another study (Quinn and Hilmer, 1994) that getting the skilled labor is very essential for outsourcing. Moreover, exclusive services like entertaining the client/customer 24/7 is also being provided by offshore outsourcing. It is also acknowledged by the U.S. firms and other countries that they can hire the highly qualified and competent personnel at low cost. Lewin and Peeters (2006) mention in their study that the postgraduate United States' engineers and scientist are becoming less available, and this is what is leading to offshore outsourcing. Moreover, when the lost-cost labor in Philippines, China, and India is providing back office services then it is not difficult to do outsourcing. There has been rapid growth in IT applications and knowledge processing services and the access for them has become easier. It points out another factor that in emerging markets fresh college graduates can be hired at $3 per hour, but conversely U.S. graduates are hired for $25 per hour, this leads to a huge cost difference. Nicholson and colleagues (2006) mention in their study that in India wages can be less than the staff of Western Europe or United States. This difference of the wages could be up 70% which is a noticeable percentage (Hatonen and Eriksson, 2009; Javalgi, 2009).

H6: If the wage cost is low, then outsourcing activities may increase.

Methodology

The segment of methodology will undoubtedly be centered on fulfilling two objectives: 1) it'll explain the methodology being with this study and 2) it'll present the reason why the specified methodology is opted for the research. The methodology will undoubtedly be split into subsections. The main goal behind breaking up the methodology segment in to subsections would be to obviously highlight all of the issues and facets of the applying and research such that it could be end up being of use, realistic and functional. Also, this separation allows the researcher to provide a sensible and exploratory abstract of the entire goals of the study (Cohen, Manion and Morrison, 2000).

Research Philosophy

Trochim (2010) in his study explains that the majority of the researches are founded on the fact that the attainment of the target can help us understand the societies much more logically while also understanding the various perceptions that may exist within various societies. This belief is driven by two primary philosophical schools of thought which are Positivism (denunciation of metaphysics i.e. all education relies round the explanation of an event) and Post-Positivism (constructivists, i.e. personal perceptions and point-of-views make us think that the planet is really a certain way). These two are specifically essential in the region of conventional social investigation, particularly this specific research.

Science, based on a positivist, would result in the actual truth and logic of the planet to ensure that we are able to direct our actions inside it better. A positivist will always look to look for the natural laws through direct management and examination. The majority of the positivists asserted that the phenomenon of objectivity was an instilled trait of a person who used scientific approaches. As the post positivists asserted that no individual could ever certainly remain objective and unbiased within their view of an event and therefore of the planet, they think that all personal viewpoints are biased to an extent. They think that unbiased-ness is really a social experience only (Trochim, 2010). The post-positivist standpoint is most effective to attain the reason for this study; therefore this study adapted post-positivism as its underlying philosophy.

Research Approach

Based on the study done by Trochim (2010), you will find two main approaches towards investigative logic: 1) deductive and 2) inductive. Deductive reasoning, also called the "top-down" tactic, works from the more general goals to the more specific goals. The inductive reasoning, also called the "bottom-up" tactic, works another way i. e. starts of from having specific goals in your mind and them expanding them in to generalized and widespread notions and techniques. To have the objective of this study; the researcher used both inductive and deductive approach.

Research type and Time line

The timeline of an investigation is directly associated with its format. You will find two main formats of an investigation study: 1) cross-sectional and 2) longitudinal studies. In a cross-sectional study the whole focus of the study is fixed inside a single time period i. e. we only have a segment of the whole spectral range of the topic we're studying or measuring. In a longitudinal study the focus is spread over a wider spectral range of time i. e. much more variables are participating and changes that occur with time will also be taken into consideration prior to making concrete conclusions (Trochim, 2010). With this study, with the full time frame open to us, we used the longitudinal format.

Data Collection Techniques

One can find two main formats or data collection strategies: 1) quantitative that is fundamentally numeric breakdown and representations of all of the data and 2) qualitative including different intangible dimensions and will incorporate photographs, videos, sound recordings. The latter is much more elaborate than the former. In this study we shall use a survey questionnaire to evaluate perception of managers engaged in outsourcing (i.e. quantitative data).

Qualitative Validity

The validity or authenticity of an investigation is what lies behind its success or failure. Even the slightest degree of illegitimacy could make the whole research a drowned effort. For just about any type of qualitative data the authenticity lays in the integrity, depth and capacity of the information collected combined with the targeted sample and the unbiased approach of the practitioner. In this study we shall make use of the survey method (questionnaire) with the same process of everyone else in the sample that will make sure that the dissimilarities contained in the responses are genuine and personal; so that the methodology won't be criticized in being subjective or inclined by any means (Trochim, 2010).

Research Design

This study follows the rules distributed by Wilson and McLean (1994) as empirical evidence has plainly shown that the questionnaire will give you us with accurate and statistical data to handle our analysis on shift work and fatigue in Air Traffic Controllers and its own negative effect on safety. Moreover, appropriate time will undoubtedly be directed at assemble and format the questionnaire to ensure that accurate results is possible.

The utilization of questionnaires has certain ethical concerns that have to be looked at before employing them for research purposes. Such as the invasive nature or insensitive approach of the questions, the possible incursion of confidentiality of the respondent, and others. The simple fact is that the success of the questionnaire completely is determined by the accessibility to willing respondents. It might be unethical for the researcher to force or pressurize the respondents to answer the questionnaire. The respondents are completely responsible for their participation in the entire process and although the researchers can give them valid reasons to participate, your decision to become listed on or leave the entire process can't be administered by the researcher. Sudman and Bradburn (1982) highlight within their study that the researcher can perform his part by ensuring the respondents of certain elements that could make him/her believe his/her concerns are now being taken notice of and can help the respondents comprehend the scope and intention of the questionnaire. These elements range from: the best of the respondent to decline or retire from the procedure whenever he or she feels uncomfortable using its direction; the truth that the conclusions produced from the questionnaire might be good for them and their circumstances; complete and ensure secrecy of the identification; the best of the respondents to retort once they felt a particular component of the questionnaire made them feel a particular way; the best of the respondent to understand all details before making a decision to participate; the surety that the questionnaire and the conclusions made wouldn't be dangerous or destructive by any means; to make certain that the approach or arrangement of the questions isn't biased, offensive, invalid and unreliable so the respondents don't want reporting the unethical state of the questionnaire; and so on (Sudman and Bradburn, 1982). This study aims to follow along with the rules distributed by Sudman and Bradburn (1982) just as much success has been achieved when researchers have previously implemented their suggestions (Cohen, Manion and Morrison, 2000).