ISSN 0798 1015

Vol. 40 (Number 4) Year 2019. Page 15

Research, development and management of an outsourcing business model in the system of improving the enterprise´s efficiency

Investigación, desarrollo y gestión de un modelo de negocio de outsourcing en el sistema de mejora de la eficiencia de la empresa.

KULEMBAYEVA, Flora 1; SEITKAZIYEVA, Aruzhan 2; GAJIYEV, Farruh 3

Received: 11/09/2018 • Approved: 22/01/2019 • Published 04/02/2019

Contents

1. Introduction

2. Methodology

3. Results

4. Conclusions

Bibliographic references

1. Introduction

The sector of outsourcing business models is large-scale and dynamically functioning in the global economic space. Its development has a significant impact on the competitiveness of the company, the level of efficiency of all organizational systems used in the production of high-quality products. Effective application of outsourcing business models allows enterprises to optimize their activities, transferring non-core functions and corporate roles to outsourcing specialized companies and focusing on the main subject of activity. The combination of efficiency on application of tools of narrow specialization of the enterprises and tendencies of concentration of the enterprises on "key competence" provides ample opportunities for development of the outsourcing market. The analysis shows that in the worldwide practice the packages of outsourcing business models are constantly revised and updated in accordance with the changing requirements of customers (Anikina, 2003).

Kazakhstan's market of outsourcing business models, on the one hand, is seriously lagging behind on its development from its Western counterpart, on the other - outsourcing for our companies is becoming a modern business model that allows us to achieve competitive advantages through access to the latest technologies, the possibility of concentrating resources on core competencies, improving product quality and financial stability. In General, business in the field of outsourcing is gradually formed in a separate direction, and many types of outsourcing of business processes are increasingly used in Kazakhstan enterprises.

The success of the domestic market of outsourcing business models is determined by: the responsiveness of the processes of state regulation of this sector of the economy; the ability of outsourcing companies to improve the quality of services, to assess possible risks and identify tools to reduce them; the growth of demand for this type of service, including the ability of the management of customer companies to develop an outsourcing strategy in line with the overall business strategy and the processing of technologies and decision-making procedures on the transfer of business processes to outsourcing. That is why the organization and management of outsourcing business models, being a complex and multifaceted process, involve the development and implementation of new conceptual approaches and techniques to ensure their high efficiency (Duncan, 1996).

Multi-aspect studies of the development and functioning of the sphere of outsourcing business models, the problems of this sector of the economy are the subject of detailed scientific analysis. Theoretical and practical problems in this field were studied by foreign and domestic scientists.

1.1. Theoretical basis of the research

Theoretical and methodological approaches to the study of various aspects on the functioning of the sphere of outsourcing business models in the conditions of market transformation and globalization of economic relations, analysis and evaluation of the reasons for the dynamic growth of this sector of the economy are presented in the classic works of Anikina, B. A.(2003), Cousin, B. (2001), Duncan, Jack W. (1996), Ford, G. (1989), Kendrick, C. (2007) et al (Tab.1).

Assessment of trends and prospects of outsourcing business processes, analysis of the current state and problems of development in Kazakhstan and foreign companies in the domestic and foreign scholars have been addressed by Lacit, M.C. (1993), Monczka, R.M. Purchasing (2010), Morgan, R. (2017), Savostyanov, M. (2007).

The problems of finding tools for assessing the economic feasibility of outsourcing and reducing the risks of implementing an outsourcing business model are reflected in the works of Gussenov, B.Sh. (2015-2018), Scott, M. K. (2004), Sparrow, E. (2004), Stern, K. and Stoke-ml, J. (2005), Storozhuk, V. A. (2016).

However, the analysis of domestic and foreign publications, revealing the problems and prospects of functioning of the sphere of outsourcing business models, management processes and organizations in this sector of the economy, led to the conclusion about the lack of elaboration of a number of important aspects of the scientific problem, including (Tab.2):

-process management procedures for outsourcing of business processes;

-assessment of possible risks of the outsourcing business model and search for tools to reduce them;

-interaction system between the outsourcing company and the customer;

-instrumental and methodological apparatus for improving the organizational efficiency of outsourcing call centers and assessing the quality of management of this process;

-insufficient development of the problem, as well as its theoretical and practical significance leading to the choice of the research topic, defined goals and objectives.

The aim of the study is to develop the theoretical basis, the development of instrumental and methodological approaches, as well as practical recommendations to improve the efficiency and quality of outsourcing business models in order to intensify the functioning of the sector in the overall process of modernization of the economy the vision of Ford, (1989).

Achieving this goal has necessitated the formulation and solution of a set of interrelated tasks:

- to study the trends and dynamic characteristics of the outsourcing business models in the modern economy;

- to assess the factors constraining the growth of demand for outsourcing services, defining as the basis of its intensification the presence of procedures for managing the process of transfer of business processes from the customer to the outsourcing company;

- to identify the main parameters of the comparative assessment of the outsourcing company and the customer company in the implementation of outsourced business processes;

- to explore a set of models and methods to assess the effectiveness of the outsourcing business model, which will affect the growth of demand in the market of outsourcing business models;

- to systematize tools to reduce outsourcing risks for both the outsourcing company and the customer company, justifying recommendations to improve their efficiency;

- to study the state and prospects of development of outsourcing call centers in the domestic market of outsourcing business models;

- to develop methodological approaches to improve the organizational efficiency of outsourcing call centers and to form an instrumental and methodological apparatus for assessing the quality of management of this process on the basis of bootstrap methods and simulation adapted to the specifics of the tasks (Cousin, 2001).

Table 1
Existing approaches to the definition of «outsourcing»

Source: compiled by the authors on the basis of the studied material (KULEMBAYEVA, F., SEITKAZIYEVA, A. and GAJIYEV, F., 2018).

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Table 2
Trends influencing the strategy of the introduction of outsourcing

Source: compiled by the authors on the basis of the study
(KULEMBAYEVA, F., SEITKAZIYEVA, A. and GAJIYEV, F., 2018).

In the process of the study general methods of research about analysis of financial statements were used: horizontal, vertical, ratio, comparison, and others.

To explore aspects of research, development and management of an outsourcing business model in the system of improving the enterprise´s efficiency following methods were used:

- review of the regulatory framework (Order of the Minister of labor and social protection of the Republic of Kazakhstan- «About the approval of Rules of the organization and financing of outsourcing of services in the field of employment» and etc.);

- analytical method (field experiment, electronic trial market and etc.);

- study of foreign experience (Savostyanov, M. (2007) and Storozhuk, V. A. (2016));

- the possibility of application of instruments of state - private partnership;

- collection and processing of statistics (methods of quantitative side research and methods of dynamic series of research of outsourcing aspects in Kazakhstan from 2001 to 2018 were applied (data of the statistics Committee of the Ministry of national economy)).

Instrumental -methodological apparatus of the study. The basis of the development of the problem and the solution of the formulated problems were the principles of the system-structural approach to the study of socio-economic objects and the theory of decision-making.

The information and empirical basis consists of data from official statistics in the field of outsourcing business models, the actual data taking place in monographic studies and publications of domestic and foreign scientists, economists, materials of scientific conferences, Internet resources, materials of periodicals, as well as data obtained personally by the author in the process of research: for example, The features of the development of foreign economic activity in the era of globalization. Gussenov, B.S. (2015); Duncan, Jack W. (1996); Fundamental ideas in management. Lessons of founders of management and management practice; Kendrick, C. (2007). Top R&D Destinations // The Outsourcing Weblog. Outsourcing News. March, and etc.

The working hypothesis of the study is based on the author's assumption that improving the efficiency and quality of outsourcing business models, the intensification of the development of this sector of the economy are possible on the basis of:

- improving the organizational efficiency of the out-sourcing companies, assessing the possible risks of outsourcing business models and finding tools to reduce them;

- the substantiation of procedures for managing the outsourcing business processes and tools for analyzing and evaluating the effectiveness of the outsourcing business model;

- a well-established system of interaction between the outsourcer and the customer in the process of making a decision on cooperation and during the implementation of the outsourcing project.

2.1. Foreign experience of outsourcing

In recent years, in most developed countries of the world, corporate profits are now growing through the transfer of production capacity and jobs to South-East Asia and other similar regions. It is believed that outsourcing is to some extent used by every two of the three corporations included in the top-100 rating of Fortune magazine. For example, two-thirds of the components and services used by Ford Corporation are ordered from third-party organizations (although initially Ford sought full independence at all stages of production) (Morgan, 2017). World-famous computer manufacturers "Dell" and "Compaq" recently moved to a wholly-owned manufacturing outsourcing, as well as the company "IKEA", which does not have its own production structure, working for many years with 12,500 external suppliers, outsourcing the entire production process, sales and logistics (today 50 Russian furniture and textile factories are almost completely dependent on the orders of "IKEA"). The leader in the production of modern sportswear - the "Nike" company  is currently without its own production (conducted by Gussenov, B.Sh. (2018)).

For example, for most American companies, the Indian outsourcing market is also attractive (mainly due to its English-speaking and technically trained workforce). At the same time, one of the important factors is the lower level of wages for some professions in comparison with the United States (Savostyanov, 2007).

A study conducted at Haas School of Business (Kellie A. McElhaney - Haas School of Business, 2018) found that American workers in professions such as telephone center operator, medical diagnostic center employee, clerk of a law firm, programmer, accountant and his accounting and payroll assistants, financial analysts, earn several times more per hour than their Indian counterparts (table 3). Jobs in these sectors are characterized by export trends, to the greatest extent today.

Table 3
The average wages of certain professions in the United
States and India (hourly pay, USD$) at 01.01.2010y.

Source: Fisher Center for Real Estate and
Urban Economics, Haas School of Business (2018).

Some developed economies of the world, which are also actively involved in global outsourcing after the United States, use their historical potential. Thus, British and French companies build relationships within the framework of the outsourcing concept in the former colonies of their countries. If you look at the label of the goods of French famous firms, many of them are made in the countries - the former colonies of France in Africa, the middle East or Indochina. At the same time, it is quite natural that French companies from the service sector use French-speaking residents from thesee former colonies of their country for outsourcing (Scott, 2004).

Kazakh companies need to find their place in the new stage of competition development. One of the methods of solving the problems of its development is to attract external performers and transfer them to non-core works for themselves. Therefore, there are new management technologies to improve the efficiency of their enterprises. One of such management models is outsourcing (KULEMBAYEVA, F., SEITKAZIYEVA, A. and GAJIYEV, F. (2018)).

Outsourcing can improve the efficiency of certain functions in the field of information technology, supply, maintenance, finance, staffing and production.

Despite the massive use of outsourcing in the West, Kazakh companies use it quite limited, the reason for this is a number of factors, such as:

1) a small degree of trust in companies in relation to outsourcers, which may be caused, by previous negative experience of outsourcing;

2) poorly developed culture of the contractual relationship;

3) the problem of keeping trade secrets;

4) lack of legislative framework;

5) high costs of outsourcing services in comparison with the performance of work on their own;

6) lack of objective information about potential outsourcers and professional staff.

One of the main reasons preventing outsourcing is the associated risk. In parallel with the management's understanding of the advantages of outsourcing, the question arises as to what functions should remain within the organization, as their loss will lead to the loss of competitive advantages, erosion of individuality and destruction of the company's image. Thanks to outsourcing, professionals have the opportunity to concentrate on their main job, thereby increasing their productivity.

After analyzing the theoretical works on outsourcing, considering the features of practical outsourcing in Kazakhstan and abroad, it is safe to say that this method of organization has both advantages and disadvantages for the company (table 4).

Table 4
Comparative analysis of the opportunities and risks
on the transition of the organization to outsourcing

Source: compiled by the authors based on the
study of domestic and foreign experience of outsourcing.

3.1. Improvement of the activities of an outsourcing company (for example, -a company for the provision of cleaning services on the regional market)

One of the main purposes with which the organization was created, is to performance of those types of activity which one of the large enterprises of Taldykorgan planned to give for outsourcing. For these purposes, the company was established  as an outsourcer. For several years they created firm rendered services of production and economic outsourcing, and also services of out staffing only to this enterprise. But the dynamics of financial indicators shows that in connection with the optimization of business processes in the company of the customer, the income of the outsourcer is reduced every year, increasing the number of employees leaving due to dissatisfaction with wages and working conditions. Dependence on a single customer firm has a negative impact on the development of the outsourcer firm. There was a need to expand your business by providing cleaning services to other third parties (KULEMBAYEVA, F., SEITKAZIYEVA, A. and GAJIYEV, F. (2018)).

To solve this problem, the analysis of competitors and the regional market of cleaning services was carried out. The main competitors in the field of industrial and economic outsourcing are 6 main firms at Taldykorgan, which provide cleaning services: LLP "Clean business", LLP "Prof - cleaning", LLP "Klinfix", LLP "Chistyulya", LLP "Snow White", LLP "Mirum".

On the basis of general information (price lists, customers, customer reviews) at the official websites of these companies, we will analyze the main competitors (Table 5).

Table 5
Competitor analysis.

Source: compiled by the authors on the basis of the studied material.

Results on the analysis of the internal environment of the enterprise and the market of production and economic outsourcing in Taldykorgan were used for SWOT analysis.

Table 6
SWOT analysis of the outsourcing
business model in Taldykorgan.

Source: compiled by the authors on the basis of the studied material.

Comparing the opportunities and threats of the external environment with the strengths and weaknesses of the organization, we can draw the following conclusions:

- a stable financial position and reliability should be used to strength its market position;

- development of marketing activities will improve information and increase the number of consumers (Gajiyev, 2018);

- formation of the image of the organization as a reliable partner should improve the competitive position of the company in the market of cleaning services.

To make suggestions for improving the activities of the outsourcing organization, to implement the plan of measures to improve the company's activities, it is necessary to perform the following actions:

a) Strict compliance with the concluded contracts for the provision of services; it is particularly important to interest the company in the implementation of the necessary services for the market.

b) Development of an effective policy in the field of personnel training, which will allow the company to gain a competitive advantage in the field of personnel differentiation.

c) Identification of the most profitable assortment positions among the existing ones and search for new opportunities for.  

d) Carrying out marketing activities to promote the company's services in the market of cleaning services;

e) Revision of the system of personnel´s motivation  with an emphasis on the quality of performance of their duties by introducing a system of remuneration for the results of activities that will lead to increased productivity (State program of industrial and innovative development of Kazakhstan for 2015-2019. http://stat.gov.kz.).

The analysis showed that the annual growth of production and economic outsourcing is about 30%, and the volume of the market of Kazakhstan cleaning services is estimated at more than $ 300 million. Therefore, the company needs to expand its presence in the market of cleaning services. Taldykorgan market of cleaning services currently tends to expand, which makes it attractive to enter it with new types of services. To implement this plan, it is necessary to carry out a number of activities:

• In order to provide high quality services and to be a competitive enterprise, it is necessary to purchase new professional equipment and high quality materials (detergents, household chemicals).

• To carry out a number of marketing activities to attract potential customers, such as: media advertising (newspaper, radio), updating the company's website with the information contained therein, positioning the company as a company that provides quality and non - expensive cleaning services. Since the company's staff includes telegram carriers, whose duties include daily delivery of telegrams to the addressees, it is necessary to develop a design of advertising leaflets with information about the company, which will be delivered to different addresses by the deliverers, which should also attract the attention of potential customers for the company.

To expand the range of services offered, including services that will position the company as a company that provides unique services.

Currently, in Taldykorgan there is an increase in the construction of large shopping centers. On this regard, there is a great need for production and economic outsourcing (cleaning services) at the same time, as well as with the growth of welfare of the population there is an increasing demand for services to provide cleaning services to individuals (State program of infrastructure development Nurly Zhol for 2015-2019. http://stat.gov.kz).

1. Outsourcing services are aimed at optimization of organizational business processes and conceptual solution of the problem of rational use of resources. The domestic market of outsourcing business models needs to intensify development in the overall process of modernization of the economy by improving the instrumental and methodological approaches, the development of practical recommendations to improve the efficiency of management of this sector of the economy.

2. More dynamic development of the outsourcing market in Kazakhstan's economy involves the intensification of demand for this type of service, improving their efficiency and quality, including allocation of structural and logical procedures for managing the processes of transfer of business processes to outsourcing, consideration and justification of the tools used for analysis, and evaluation of the effectiveness of outsourcing business models.

3. The outsourcing model of business organization, along with undoubted advantages for all parties involved in the process, carries significant risks. That is why it is important at the stage of conclusion of the outsourcing agreement, and in the process of its implementation, as much as possible to provide for the possibility of risks for the outsourcing company and for the customer organization, to identify tools to reduce the likelihood of failures and to justify recommendations to improve their efficiency.

4. The management process within the framework of the implementation of the outsourcing business model involves a comparative assessment of the capabilities of the outsourcing company and the customer company. For comparison, it is necessary to identify the key areas that most affect the organizational performance of the customer, and within each of them to identify the factors that should be subjected to detailed analysis when comparing the internal capabilities of the business processes transferred to the outsourcing company.

5. Audit of outsourcing call centers revealed their low organizational efficiency of their work, which actualizes the development of methods to improve the effectiveness of management of organizational processes of call centers and justification of instrumental approaches to assessing the quality of their functioning.

6. Simulation modeling can be considered as a promising approach to solving the problems of diagnosing the state of an outsourcing call center and improving the efficiency of its management. The model acts as an integral part of the database management system or complements the existing method of accounting for business processes with analytical capabilities through integration into the information system of the organization. To improve the adequacy of the generated in the simulation model of the flow of input requests, it is advisable to use the technique underlying bootstrap methods, thus ensuring compliance with the model characteristics of the law of distribution of input service requests in time, without the use of any special identification procedures.

4.1. Brief description

The results of the study made it possible to draw a number of conclusions and proposals.

1. The development of the outsourcing business models sector has a significant impact on the competitiveness of companies, on the optimization of their activities by transferring non-core functions to outsourcing specialized companies and focusing on the main subject of activity. Kazakhstan's market of outsourcing business models is seriously lagging behind in its development from its Western counterpart.

Determining for its successful functioning become a well-established processes of state regulation of this sector of the economy, improving the quality of services, the ability of the management of customer companies to develop an outsourcing strategy in line with the overall business strategy, development of technologies and decision-making procedures for the transfer of business processes to outsourcing.

It is important to note that modern management considers outsourcing as a form of interaction between the two organizations, which allows to improve the efficiency of certain functions of enterprises in the field of information technology, supply, maintenance, finance, staffing and production. Outsourcing helps to solve the problems of functioning and development of companies in a market economy by reducing costs, accelerating adaptation to changing environmental conditions, improving the quality of products and services, and reducing risks.

2. During the analysis of trends and prospects of the market of outsourcing business models in the Kazakh economy, we have identified the following factors of its activation:

• the beginning of economic growth in the domestic economy;
• the completion of restructuring processes at large enterprises, namely the allocation of non-core assets;
• an increased competition in the market and the threat of reducing business profitability;
• a gradual improvement of the legal environment, which has a direct impact on the responsibility and law-abiding of entrepreneurs and executive managers.

The paper highlights the principles of the outsourcing concept: attracting external resources by transferring to a specialized company certain non-core functions important for the effective functioning of the company's business; better performance of the transferred functions and reducing costs; optimization of business processes by increasing their transparency, manageability and, consequently, predictability.

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1. Doctoral student of 2 course on the specialty "Economics". Narxoz University. Almaty. Republic of Kazakhstan. king_bara@mail.ru

2. Doctor of Economics, Professor, head of the Department of Economics. Narxoz University. Almaty. Republic of Kazakhstan. king_bara@mail.ru

3. Accounting and auditing. Master, senior lecturer. Zhetysu State University named after I. Zhansugurov. The faculty of law and Economics. Taldykorgan. king_bara@mail.ru