It is not clear (and scarcely matters) whether management’s ostensible intent to offshore was an ambit claim used in negotiations with unions or a firm intention. The issues of offshoring information technology and catering are in abeyance. Qantas recently agreed to outsource
$A1.4B worth of Information Technology and data center services to IBM and Telstra (Aus- tralia's dominant telecommunications company). The vendors could have some of Qantas's work done overseas. Qantas constantly opines that it will have to continuously reduce costs to stay competitive (a claim belied by its large and growing profits and cash flows), and that offshoring is a way of obtaining drastic rather than incremental cost reduction.
This section was sourced from the Qantas Chairman and CEO’s reports at http://www.
qantas.com.au/info/about/investors/annualReports, Qantas press releases at http://www.
qantas.com.au/regions/dyn/au/publicaffairs/introduction?, and reports from various Aus- tralian newspapers.
to industry. This may be attributable to the research difficulties adumbrated here. Some outstanding research issues are:
• The size and growth of the offshoring market needs to be ascertained. This is difficult and expensive. Executives may be reluctant to admit that they are using offshoring or know that work offshored to an ostensibly local vendor is done overseas. An interna- tional research consortium might be appropriate.
• The tangible and intangible costs and benefits of offshoring to participants and broader society need to be ascertained. So too does the interaction between offshoring and organizations’ strategies and evolution. Case studies are probably the most appropri- ate instrument. However, a comprehensive study of one firm would require several interviews in the firm and with its vendors and/or clients; it is likely that some parties would decline participation. Low response rates would limit the generalizability of findings.
• Research determining the success of different methodologies and applications of offshoring is appropriate. Anecdotal evidence suggests that the relationship between vendor and client is often fraught. Typically, euphoria experienced when the contract is signed sometimes sours when unanticipated difficulties emerge; a working relationship emerges after much hard work. These difficulties can be exacerbated by geographic and cultural differences. The influence on business success of the relationship between the two parties (intimate or arms-length) and its contractual basis (especially service level agreements) merits research.
• Statistical studies relating knowledge of a firm’s use of offshoring and financial success might be illuminating. For example, iconoclast Strassmann (1997) provides statistical evidence that heavy use of outsourcing presages a firm’s failure.
• The socio-political effects of offshoring merit investigation. Will they be as severe as some alarmists anticipate? What government policies would help spread offshoring benefits rapidly and widely? Will public disquiet impede free trade negotiations or fuel xenophobic political movements?
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