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Information technology has radical impact on the business environment due its ability to gather, process, expedite and store information. In fact, in today's world IT plays an important role in every segment of business, Chan (2000).To survive and prosper in the current competitive world, commercial organisations are increasingly exploiting IT facilities. Technological developments in the field of IT have given immense opportunities for organisations to expand their geographical reach as well as sophisticate their operations. According to Chan (2000), in the initial era, IT was mainly considered to be a supporting player in the business strategy of the organisation. But now it is taking a significant role in the business strategy due to the emergence and successful application of IT innovations. Kumbakara (2008) has identified that, developments in IT since 1980 have vastly increased the complexity and volume of information that can be transferred, while dramatically lowering information transactional costs. He further states that while organisations benefit from lowered transaction costs, their dependability on IT is increasing. Hence organisations are finding it difficult to manage the complex and diverse IT infrastructure considering the cost and time consumed. As a result, more and more organisations are entering into contracts with IT service providers to manage their complex IT infrastructure which has given rise to the concept of outsourcing.
As discussed by Fan (2000) in his study, apart from handling the outsourced business activity, outsourcing has many advantages such as cost reduction, improved quality, flexibility and an opportunity to focus on the core business function which has made outsourcing the top-notch business strategy for organisations seeking global leadership. Further, Cross border trade barriers have declined drastically over the last decade thus opening up opportunities for developing countries to participate in the global competition. Additionally due to affordable information and communication technology, these countries have developed a competent IT infrastructure which is capable of delivering the highest quality standard service to customers abroad. Hence organisations are switching to offshore outsourcing, which are addressing their financial and quality needs (Serapio, 2005). Quinn (2000) argues that companies who fail to take advantage of emerging global IT services industry may well lose out to those who do it. ZDNet UK magazine, has rated IT outsourcing as the fastest growing international business in the world (www.zdnet.co.uk). According to gartner (www.gartner.com), a leading IT research company, the estimated growth of IT market by 2009 would approximately be GBP £500 billion by 2009, where as Nasscom (National Association of Software and Services Companies), a global trade body in India has quoted the growth of global IT outsourcing from GBP £25 billion in 2004 to GBP £55 billion in 2005. They have further stated that 87 % of outsourcing in the world is taking place from the higher economic triads: USA (37%), Western Europe (35.4%) and Japan (14.2%). On the other side, India and china are the preferred outsourcing destinations for IT services, having said that, 16 other smaller locations such as Brazil, Philippines, Ireland, Israel, Malaysia and Russia have emerged as potential destinations of outsourcing in recent years. With this rapid growth of outsourcing many practitioners and academic researchers have developed numerous concepts and theories such as offshoring, onshoring and backshoring.
2.2 Definition of Outsourcing:
Outsourcing information system (IS) has been the focus of study and interest to scholars due to its growing popularity and promising future prospects. In the initial era, IT outsourcing was purely a contract between an organisation and a service provider. Grover et. al. (1994) defined outsourcing as a service provider undertaking the part or entire IS activity of organisation under a contract. With the evolution of outsourcing from traditional to strategic, its perspective deviated from only being cost effective. Today outsourcing is defined in a much broader way with consideration of following major aspects.
Business function to be outsourced - a strategic outsourcing decision taken by the management of an organisation by analysing opportunities, risk and availability of resources using transaction cost based theory and resource based theory. (Qu and Brocklehurst, 2003)
Outsourcing service provider - a selection of external vendor with IT infrastructure capability and skill set of resources at a profitable geographic destination which can dissect and address outsourcers need. (Soliman, 2003)
Manage outsourcing engagement - a protocol made between the organisation and vendor to manage the outsourcing dealing successfully to enhance the efficiency, quality and project delivery. (Embleton and Write, 1998)
Add together outsourcing mainly has two actors, first the outsourcers, who outsource the business activity, and on the other side is the enterprise which delivers the service that is outsourced. This outsourcing is done with two major drivers that are nothing but cost efficiency and product recognition. By outsourcing, companies can target the core business effectively and achieve short and long term goals, (Franceschini et al, 2003)
2.3 Managing Outsourcing engagement
As described by many authors and practitioners, outsourcing could bring great efficiency in business if handled appropriately. However if poorly managed the costs of resolving difficulties and getting an offshore project back on track can wipe out virtually all anticipated benefits (B1).
Studies by (White & James (1997), Franceschini et al (2003), Kakabadse & Kakabadse (2002), have found in their study that IT outsourcing holds great deal of risks and measures. According to Aubert et al (2004) there is significant hidden cost associated with outsourcing such as telecommunication cost, additional legal advice, travelling cost and contract cost. These substantial expenses may match the saving made by outsourcing. Additionally, cultural difference between outsourcer and vendor located in different country could risk the potential savings of the outsourcer (Qu & Brocklehurst, 2003). They have further explains that the obvious differences of language and culture may result in miscommunication in turn causing significant loss of time and effort. Studies by Athreye (2005) have found out that geopolitical concerns and social unrest can pose a great deal of risk for organisations opting for offshore outsourcing. He has explained this with an example of a country India, which holds a major share of offshore market, the geopolitical risk frequently mentioned is the dispute between India and Pakistan over Kashmir which hampers the business continuity in India very seriously. Several authors have termed outsourcing as a complex contractual engagement due to its legislative challenges such as intellectual property rights, software piracy and trade related issues. These issues usually create disputes and waste significant time due to involvement of foreign jurisdiction. Hence, organisations influenced by attractive cost-saving strategy may end up losing valuable time and cost, if they overlook the risk and threats associated in outsourcing.
Competency A role is the set of responsibilities or expected results associated with a job. A Job is a collection of tasks and responsibilities that an employee is responsible to conduct. Whereas task is defined as a unit of work, that is, a set of activities needed to produce some result. Complex positions in the organisation may include a large number of tasks, which are sometimes referred to as functions. Job descriptions are lists of the general tasks, or functions, and responsibilities of a position. Job descriptions are usually developed by conducting a job analysis, which includes examining the tasks and sequences of tasks necessary to perform the job. The analysis looks at the areas of knowledge and skills needed by the job.
In the backdrop of the Role and Competency model adopted by IT BPO, Role definitions and its usage assume a center stage in depicting talent held by the organisation. It helps organisation in many ways:
Provide perspectives to the supervisors to understand the existing roles and the mechanism to deploy the same within the respective units.
Provide a role identity to the employees based on the role performed by him.
Attain perspective of role profile of employees playing similar roles in various business units by referring to standardized role definitions.
Aid the supervisor to improve accountability through focused role based appraisals.
A Competency is a set of characteristics that produce outstanding performance in a given job, role, organisation or culture.
Job descriptions (as explained it earlier topic: Role) typically lists the tasks or functions and responsibilities for a role, whereas competencies lists the abilities needed to conduct those tasks or functions.
Competencies are further divided into knowledge, skills and attribute (KSA) Knowledge and skills from technical competencies and attributes from the behavioural competencies.
Technical Competencies: These deal with Knowledge and skills associated with the function, role and task.
Behavioural Competencies: A behavioural competency is an attribute which enables a person to deliver successful performance. In other words, Competencies are what differentiate an Average performer from a superior performer within an organisation.
Fig: KSA Grid
Why are competencies important?
It can raise the performance bar for all employees doing the same work by helping them understand how competencies used by exemplary performers are used, to achieve a higher level of performance.
Competencies focus individual achievement on the outputs or results expected of persons rather than the traditional approach of focusing on employees' successful completion of work activities, which might or might not results in obtaining the outputs or results that are valued by customers.
In organisations today (and probably more so in the future),"Jobs "are a less meaningful entity for describing performance expectations than is the "Role" that must be completed for organisation success. Using a "Role-Based" approach, the outputs or results are defined and the tasks and competencies needed to achieve them are identified and brought into alignment with each other. Then, in order to achieve the outputs or results, it is a matter of locating the "external candidate or employee" with the competencies needed to achieve the desired result. Therefore, Competencies provide that avenue for organisations to shift from job based to Role-Based work assignments.
Role and Competency Model Application:
Employee development: Once employees understand the competency requirements for jobs and the gaps between their competencies and those required by the jobs they want, they will proactively ask for training or other developmental activities to close the gap. Similarly, once an organisation is aware of the competencies it needs to be successful and the gaps between these needs and the capabilities of its existing or projected staff, it seeks selection or developmental programs to close the gaps.
Delivery: In changing environments and organisations, employees' potential to contribute to the organisation in the future is extremely crucial. To be able to measure this, either a person's past attributes can be assessed (BEI-past performance is indicator or future performance); or participants can complete a range of exercises which stimulate the activities carried out in the target job to predict future job performance. Hence for Delivery, the Role and Competency Model will enable them to gage an associate's strength and development areas. It also enables them to conduct standardized assessments for associates.
Recruitment Sourcing Team: Selection is the process of hiring people, either people outside the organisation (Recruitment and Sourcing) or inside (RMG). The better the fit between the requirements of a job and competencies of the jobholder, there will be higher job performance and job satisfaction.
Hence for Recruitment, Sourcing and RMG, the competency model will:
Enable them to create assessments for selection which can assess the required competency levels for the roles at the time of entry.
Enable Recruitment along with Learning and Development & Deliveries to measure competencies in a standardized manner.
Enable them to align selection methodology with promotion methodology for a standardised and fair approach.
Enable them to gage competency gaps in campus/lateral hires and Co-ordinate with L&D prior to hire.
Enable accurate role fitment based on required/held competencies (RMG)
Enable RMG to gage the competency pool available which will act as data point for recruitment.
Competency based selection can be a way to gain competitive advantage. The market for human talent is imperfect. An organisation knows how to assess competencies effectively can, for example, hire "lower priced than the market' but highly intelligent ITians from lesser known schools. Here competency-based selection is analogous to buying low-priced stocks of small companies with major growth potential before their value is recognised by the market.
Instructional Resource Management Learning & Development Innovation Center: A lengthy training period may transpire before new hires become productive. New hires with the competencies to do a job become fully productive faster.
A gap between the competencies needed and what the organisation can hire for indicate the training new hires will need. Hence for instructional Resource Management, Learning and Development innovation center, the competency model will:
Enable them to map their training module to the competency level to upskill associates.
Enable L&D along with the Recruitment & Delivery to measure competencies in a standardised manner.
Enable L&D to gage if an associate is trainable or not as per competencies required for the role.
High potential management and Succession planning: Competency based succession planning systems identify the competency requirement for the critical jobs, assess candidate competencies, and evaluate possible job-person matches. Career path 'Progression maps' identify key jobs for lateral or higher level 'target positions'.
A competency-based succession planning systems assesses how many employees in which jobs the competencies to perform well in the key target jobs.
Performance Management system: for the performance management system, the competency model will enable them to arrive at threshold scores for promotions. It also enables them to resolve associate queries regarding competency levels and assessment methods. To study all coll
Role and Competency creation:-
Collating Data: Role and competency creation generally starts by deciding the honeycomb. Honeycomb is defined as a various processes are linked together and have influence on each others. To create a honeycomb structure competency mapping needs to be done.