The Dynamics of Outsourcing: A Bibliometric Study

• Sofia University “St. Kliment Ohridski”

Introduction

The process of globalization expands the focus of outsourcing to all sectors of the economy. The main motive for the implementation of outsourcing strategy is to reduce production costs and to create competitive advantages both to the companies and to the national economy. The benefits of outsourcing determined the increased research interest which led to the emergence of new theories. While at the beginning scientific analyses suggests as a basis for application of outsourcing the concept of trade liberalization (price differences for individual countries), according to modern views the reasons for outsourcing are transaction costs and incomplete contracts (imperfect markets).

In the new reality, the outsourcing is seen not only as an opportunity but as a threat to national and global economy. The first studies outline the perception of the outsourcing strategy as contribution to achieving competitive advantage of corporate and national level, which defines it as an important management tool and explains its widespread use. The effects of the global crisis, however, show that outsourcing is a major mechanism for transmitting the crisis which necessitates the need to critically rethink its advantages.

After getting acquainted with much of the existing literature on the subject, we come to the conclusion that outsourcing is increasingly used as a way out of interdisciplinary situations and less to explain its nature. Like the literature containing new theoretical formulations on other innovative tools (e.g. risk management and IT), outsourcing research contains a wide variety of authors and concepts, leading to multiple interpretations and ultimately reduces the importance of the instruments themselves. Upon reaching our conclusions, other scientists focus their efforts on bibliometric studies related to publications on new tools: transaction costs;¹ human resource management;² knowledge management;³ strategic management;⁴ organisational behaviour;⁵ entrepreneurship;⁶ competitiveness.⁷

Methodology

We will try to determine the dynamics in scientific publications relating to outsourcing. Given the innovative nature of this tool, the number of such studies of the literature is limited and they cannot be used as a source of secondary data analysis. From a cognitive point of view we will trace the application of scientific theories in practice, from the organizational point of view - changes in the activities, and from the geographic point of view - to what extent is a the topic of outsourcing global. The scientific publications are seen as a direct image of scientific achievements, i.e. without time lag in their implementation. The Social Science Research Network (SSRN), Rochester, NY, USA is used as a source of the study - a website (ssrn.com), created in 1994 for rapid dissemination of scientific research in social and humanities issues. SSRN has a leading position in the world ranking for database open access Ranking Web of Repositories.

To be able to extract the dynamics, in the study are included publications that meet the following criteria: the title contains the term "outsourcing"; the publication is attached as a file; the access to the publication is free; the keywords are specified. During the considered period (1999-2015), a total of 437 publications meet the criteria (Figure 1).

 Figure 1. Dynamics of publications

Results

The dynamics of the publications identifies four periods, as indicated by a dotted line. During the first period (1999-2001) the number of publications is a constant - an average of three publications per year, during the second period (2002-2009) - their number is increased to 48 per year, and during the third period (2010-2011) the number is decreased respectively till 38 publications. In the last period (2012-2015) the trend is similar to that in the first period - relatively constant number of publications, and the difference is the larger number - an average of 30 publications per year. At every period a publication has an average of 32 pages and has two authors (with more authors are interdisciplinary publications - taxes and foreign direct investments). The small number of publications at the beginning of the period explains the big number of citations - up to 163 citations of a publication (Table 1).

Table 1. Top 10 Publications - Number of Citations

Geographical Scope

In terms of geographical scope, the dynamics of publications can be divided into three periods, in which especially impressive is the traditional presence of India as a host country (Figure 2). During the first period (2000-2003) the publications concern a limited number of countries with developed economies (UK, Germany and USA). It could be argued that this period established the modern location for outsourcing and largely determined the direction of outsourcing activities to the Far East (India and China).

 Figure 2. Number of Publications by Countries

In the second period (2004-2008) we see an expansion of scope in both the home and host country. The representatives of the first group are mostly from among the members in the G7. Unlike the previous period as a host country are joined from Eastern Europe and Africa. A new element is the inclusion of certain geographic conglomerates - the European Union, the Organization for Economic Cooperation and Development.

During the third period (2009-2015) the geographical scope is expanding to countries in South America. The publications are addressed to a specific country. Unlike the first period, however, they do not indicate a bilateral relationship between home and host country.

Theoretical Scope

According to the theoretical scope, in the publications most often used the agent theory and economics of transaction costs. The dynamics of outsourcing theories can be divided into three periods:

• Period of interpretation and clarification (2001-2005) - a limited number of scientific theories with a low level of application (General equilibrium theory, business models, core competency theory);
• Period of regulation by state and interstate policy (2006-2009) - an increasing number of macroeconomics theories - the theory of comparative advantages and its mathematical model for foreign trade (of Heckscher-Ohlin), a comparative analysis between countries;
• Period of company policy (2010-2015) – outsourcing is seen as part of the company strategy and management tool. Case studies and practically-oriented studies at microeconomics prevail.

Sectoral Scope

The sectoral scope of publications includes the application of outsourcing in a specific economy area. The most common sectors are the labor market, IT and services (Table 2). The dynamics of sectors can be divided into three periods:

Table 2. Top 10 Economy Sectors by Publications

• 2000-2003 - limited number of sectors of actual production and foreign trade;
• 2004-2009 - extending the scope with sectors related to accounting and taxes, as well as with financial and banking services;
• 2010-2015 – inclusion of IT and telecommunications, supply chain and logistics.

Lexical Scope

The study of lexical scope of publications is related to the use of the word “outsourcing” in combination with other nouns, the use of other economic terms (similar or opposite) is determined by the specific focus of the publication (Figure 3). In the first case, “outsourcing” is complemented by the conjunction “and” (Marin, D. A New International Division of Labor in Europe: Outsourcing and Offshoring to Eastern Europe. Centre for Economic Policy Research. 2005), and in the second - by “or” (Whitten, D., S. Chakrabarty, R. Wakefield. The Strategic Choice to Continue Outsourcing, Switch Vendors, or Backsource: Do Switching Costs Matter? Information & Management, 2010, 47(3)).

 Figure 3. Network analysis of lexical scope (used software UCINET 6.613)

According to the lexical analysis we can distinguish three phases: At the beginning of the period "outsourcing" is combined with a large number of similar concepts due to its innovativeness and the small number of existing posts (for example: Gao, T. International Outsourcing, Innovation and Growth. University of Missouri, 2002, Working Paper No. 02-13), then came to be used as compared with other terms (for example: Federico, S. Outsourcing Versus Integration at Home or Abroad. Bank of Italy Temi di Discussione. 2010, Working Paper No 742), and in recent years is used for self-importance (for example: Fedorenko, R. Development of Outsourcing in the Customs Sphere. Asian Social Science, 2014, 10(20)).

Conclusions and Recommendations

Summarizing the foregoing, we can identify three periods in the dynamics of outsourcing (cross-analysis).

The first period (2000-2003) represents introduction of outsourcing in the science, which explains the small number of publications and big number of citations. There are attempts to its definition and dominate its scientific explanation of the nature and application. Issues related to outsourcing are the focus of attention primarily on developed economies. The concept is represented by validated economic theories and is oriented to the real sector.

During the second period (2004-2009) the attention of researchers is growing to outsourcing and it enters in the priorities of state policy. This is the reason for the expansion of its scope and the inclusion of emerging economies. Its importance is seen by comparison with other similar instruments in the economics and management. The practical orientation of outsourcing is in the financial sector and services due to their imaginary and mobility abroad.

In the third period (2010-2015) the outsourcing is of particular great interest for the companies. Reducing the volume of publications can be explained by the effects of the global crisis, and the use of case studies involving narrow market segment as IT and supply chains. For completeness of the analysis may be made some recommendations for future research on the chosen topic. In addition to my previous research, the topic of outsourcing can focus on pharmaceuticals and its components - as internal audit⁸ and international good practices.⁹

This recommendation is based on the fact that the pharmaceutical sector is characterized by the most complex chain of added value and comparative advantages that Bulgaria would receive as a host country.

References

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8. Tsvetanova, Y. Internal Audit in the Pharmaceutical Sector: International and National Good Practices. Journal Aktiv, April 2014, 13-15.
9. Tsvetanova, Y. Features of Internal Audit in Pharmaceutical Industry. Pharmacia, 2014, 61(2), 30-34.

Yulia Nedelcheva is a PhD candidate at Sofia University “St. Kliment Ohridski”, Bulgaria. Her fields of interest are outsourcing and good practices in pharmaceutical industry.