Analysis of Results
This research is ? first quantitative analysis of ? perceived risks of BPO in ? Uk BFI. ? results are very encouraging, and ? high response rate indicates ? importance of ? topic and ? interest of practitioners in ? results of this research. ? data analysis reveals that all hypotheses hold as expected, showing significant loadings. ? R^sup 2^ values of ? dependent variables are satisfactorily high, indicating ? high degree of explanatory power of its predecessors.
? influence of perceived hazard on attitude (hypothesis 1) shows ? very high loading of -0. 606, indicating that perceived hazard has ? strong (negative) influence on ? attitude towards BPO. This finding is further supported by ? R^sup 2^ of ? attitude construct (0. 37). Hypothesis 2 was as well completely supported. ? high loading of 0. 746 and an R^sup 2^ of ? dependent variable of 0. 56 demonstrate that ? managerial attitude towards BPO has ? high explanatory power in terms of ? intention to increase ? level of BPO.
Hypotheses 3 were also fully supported with loadings of 0. 212 to 0. 243. This indicates ? satisfactory explanatory power and also shows that these three hazard facets are valued almost equally
? perceived financial hazard of BPO can reliably be predicted by unexpected transition costs, hidden service costs, and switching costs. These indicators had ? significant effect on ? financial hazard facet. ? high impact of hidden costs (0. 537) and unexpected transition costs (0. 411) indicates that ? managers mainly blame ? service provider for an overrun of planned costs. Switching costs are seen as ? problem (0. 302) but do not weigh as high as ? other risks. Altogether, ? chosen formative indicators give ? good and reliable insight into ? financial hazard facet.
Its loading towards ? perceived hazard facet (0. 243) is ? highest of all hazard facets. This indicates ? relative importance of financial hazard perceptions for ? overall perceived hazard. Financial risks have been investigated in many previous studies (e. g. , (Alexander and Young 1996; Aubert et al. 2002; Jurison 2002; Adeleye et al. 2004)). ? insight gained in this research is therefore ? ranking of ? diverse individual risks instead of merely naming them. Performance Hazard
? performance hazard facet comprises ? individual risks of communication mismatch (0. 355), security breaches (0. 284), inexperienced service provider (0. 246), procedure multifacetedity (0. 226), and service debasement (0. 195). These indicators have significant weights in terms of ? hazard facet, though those of service debasement and procedure multifacetedity are only at ? 0. 1 levels. ? hazard of communication mismatch between ? bank and ? service provider contributes most to performance hazard as previously described by (Alexander and Young 1996).
In addition, managers perceive possible security breaches as ? severe hazard (compare (Jurison 1998; Khalfan 2004)), which is understandable considering ? present press coverage (see, e. g. , (Dash and Zeller 2005)). ? third most significant performance hazard is to select an inexperienced vendor (see (Willcocks et al. 1999; Bahli and Rivard 2003)). This is assumed to be due to ? relatively young BPO market in Uk and indicates that banks do not assume that existing service providers offering new BPO services automatically execute these services at ? same level as ? other services in ? portfolio.
? findings indicating ? relevance of ? hazard of service debasement and procedure multifacetedity for an outsourcing venture are in line with previously conducted research by (Lacity and Willcocks 1995; Ang and Straub 1998; Aubert et al. 1998; Bahli and Rivard 2003) but rank lowest on ? performance hazard scale. Strategic Hazard ? strategic hazard facet is formed by ? individual risks of lock-in with ? vendor (0. 446), contrary objectives (0. 338), loss of innovative capabilities (0. 330), and loss of control (0. 179). All of these individual risks had ? significant impact on ? hazard facet, though loss of control only at ? 0.
1 level. ? dependency of ? bank on ? service provider had ? highest effect on strategic hazard, which complements ? analogous discussion of ? psycho-social hazard facet below and is in line with previous findings (e. g. , (Barthelemy and Geyer 2001; Quelin and Duhamel 2003). In addition, managers perceive great hazard from divergent objectives between ? partners of ? BPO engagement and ? possible loss of innovative ability. These risks have before been identified by scholars (Earl 1996; Lacity 2002) and add to findings which spotlight on dependence and lock-in (Cheon et al. 1995; Aubert et al. 1998; Bahli and Rivard 2005).
? loss of organize loads moderately low, which is surprising, as loss of control was previously reported to be ? main hazard (Quinn and Hilmer 1994; Jurison 1998) ? clarification for ? fact that ? hazard of losing control has declined in importance could be that ? deployment of outsourcing governance mechanisms has turn out to be more widespread in recent years (Gewald and Helbig 2006). By establishing effectual governance structures ? association at all levels of ? involved corporations increases, therefore decreasing ? bank’s hazard of losing control over vital decisions. Psychosocial Hazard
? psychosocial hazard facet is constructed by one social and two psychological risks. As mentioned above it is very difficult to measure this facet, which has also turned out to be ? case in this research, as ? psychosocial hazard facet has ? lowest (yet still significant) loading of all hazard facets in ? perceived hazard construct. Nevertheless, ? three indicators tested offer interesting insights. As already shown in ? strategic hazard facet, ? possible lock-in with ? service provider causes ? perception of high hazard for ? manager (0. 502), due to ? virtual irreversibility of ? decision (Jurison 1998).
? loss of personal reputation amongst peers due to outsourcing ? business procedure is also regarded as being ? high hazard (0. 490). This is understandable, taking contemporary press coverage into account, which is overwhelmingly negative towards outsourcing due to ? expected loss of jobs and wage cuts. ? third most significant psychosocial hazard for ? manager is ? indirect responsibility for procedure execution (0. 458). Even if ? manager is no longer in charge of ? operation, she (and ? bank) will still get blamed for all errors that are made. This responsibility without direct control obviously causes ? high hazard perception.