Lean-agile performance measurement for business process outsource service in Malaysia / Oludapo Samson Oluyinka

Faculty of Industrial Management

Thesis (Master of Science in Project Management) -- Universiti Malaysia Pahang -- 2018

Includes bibliographical references

Decades ago, offshoring plays a significant impact on manufacturing processes by drastically reducing the production cost. The idea to offshore to other countries in order to tap from their resources have led to the next global shift, Outsourcing. However, numerous underlying outsourcing theories makes it a challenge to have a unify measurement model. It was observed that there is lack of a unified performance measurement model for an outsource business processes and changes in business orientation to business as a service thus, necessitated a careful examination. Therefore, this thesis explored different facet of outsourcing theories and frameworks, consolidate these theories as the building blocks of achieving a successful business process outsourcing. Hence, in this study the researcher carefully reviewed outsourcing theories from lean and agile methodological perspectives. The overall goal of this study is to introduce a set of key quality factors that are intended to facilitate the effective performance measurement of business process outsourcing. To achieve this objective, a confirmatory factor analysis was used. Contrary to previous studies on outsourcing as a means to gain cost competitive advantage, the researcher posit that outsourcing solely on cost advantages will adversely affect innovative capability and flexibility on a long run. The researcher’s argument is supported by the result of this study which showed that cost have high correlation with speed and service level. This indicates that the internal effects of speed have much to do with cost reduction. As organizations process / deliver services to their customer on time, the lower the overhead cost. On the other hand, cost have a very low relationship with innovation. This indicates that innovative capabilities are hindered by organizations focusing all resources on cost minimization. For BPO companies there are two areas where speed reduces cost (reducing inventories and reducing risks). Inculcating speed as part of performance measurement of a BPO operation will help organizations to anticipate the cost of service recovery, the cost of restocking inventory and anticipate cost of risk. Furthermore, by extension the result of this study also indicate that BPO performance measurement focusing on cost reduction will minimize the investment of resources in business operations this, in turn, will lead to difficulties in responding to changing customer's requirements in terms of volume, delivery, and new product. The implication is that on the long run cost focus strategy have a negative effect on innovation and flexibility. This is pertinent because BPO companies work with a predefined metrics which has pushed innovative consciousness to the background. Undoubtedly, innovation is a creative endeavor which implies that creativity is inherently unpredictable and unplanned. Moving forward, it is imperative for companies to shift from traditional view of outsourcing solely on cost advantage to creative customer relationship management and satisfaction, to improve employee engagement while maintaining timely service. This study however, have its limit in confining the coverage area of assessment to Malaysia. The researcher would like to see a further extension to other notable outsourcing countries like India, China and at large to other continent.