From Senses to Sensors

Abstract:

One key dimension of the virtualization of the workplace is the formation of new types of partnerships where organizations let internal functions be handled by an external partner, the so-called outsourcing of services. The formation of an outsourcing partnership imposes the risk of knowledge-drainage on the client organization as specific internal competence decreases when the service provider takes over the technological knowledge and has a significant impact on the business processes in general. The aim of this paper is to address the issue of partnership outsourcing and to explore strategies that are used to keep the competence within the client organization even as it opens itself up to the partnership. Based on the framework of Four Outsourcing Relationship Types provided by Kishore et al. [1], this paper investigates the relationship between a large minerals group, Alpha Corp. and its remote service provider, RDC. Alpha has three different strategies for maintaining competence within the organization while engaging in the outsourcing relationship. The first is exploiting the full potential of its partnership with RDC, the second is heavy investment in information technology, and the third is structured and systematic maintenance. The findings of the study show that the relationship between Alpha and RDC can be characterized as an alliance type relationship and that the only way for Alpha to preserve competence is to maintain an inspired and engaged workforce and fully embrace the partnership in order to create a win-win situation.

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