JIANGSU UNIVERSITY

Thesis Proposal
Undergraduates of the 2018 Session

CLASS：International Economics and Trade, 2015

STUDENT ID： 5101151307
NAME： Tendai Chinhemba
SUPERVISOR： 陈银飞

Jan. 2017
 Proposed Title for Dissertation
THE EFFECTS OF OUTSOURCING PRACTICES ON LOGISTICS SERVICES IN
SOUTH AFRICA: A CASE STUDY ON KHAN TRANSPORT

I. Background of the Study

With a rise in globalization, outsourcing is increasingly becoming a vital business tactic; a lot
of advantage is gained as external suppliers are able to supply products or services in
a highly effective and efficient manner. Outsourcing is heading towards being very common
and is mostly driven by international rivalry, greater need for flexibility, access to global
resources and financial benefits. Many enterprises choose to outsource its non-core business
to other enterprises to reduce cost and increase the efficiency. Many enterprises choose to
outsource their supply chain management (SCM) and leave it to a third-party organization in
order to improve their services. Today, outsourcing has become a mainstay of corporations.
Outsourcing and Supply Chain Management (SCM) have both been recognised as alternative
strategies to gain higher competitive advantage, other than to achieve greater organizational.

Advances in technology have reduced transportation costs considerably, but more

importantly, the development and rapid dissemination of information technologies have had
enormous economic impacts through the transformation of work processes, organisational
structures as well as on how we communicate. Large parts of the economy have become
digitized which has enabled business activities to be conducted in entirely new ways, as well
as across large distances. This has opened possibilities of trade in a variety of services that
were traditionally non-tradable, and caused a growth potential

In the past few decades ‘outsourcing’ has become very popular not only in the corporate
world but also in mass media, with the declining share of world output accounted for by
countries traditionally defined as industrialized or developed, the rapid industrialization of
formerly less industrialized and lower-income states, and most recently, the Global Financial
Crisis of 2007-2008 having all contributed to the constant use of the term. In countries
perceived to be net sources of outsourcing, the term has been widely circulated in populist
arguments related to the loss of jobs, higher unemployment and decreasing welfare. For that
reason existing theoretical and empirical studies alike almost exclusively view offshore
production through the lens of the source country, most commonly the USA. Research
concerning inward outsourcing,
however, has been scarce and almost entirely theoretical. The purpose of this study is to
explore that niche by analyzing the effects of outsourcing on the welfare and productivity of
the recipient economy,in this case South Africa.
II. Research Questions and Its Significance
1) Establish the effects of Outsourcing on South Africa’s Employment, Investment and
Technology Innovation
2) Determine the extent to Which South Africa should Outsource
3) Identify the key drivers for outsourcing practices in South Africa
4)
5)

Ⅲ. Literature Review
Contributing factors of outsourcing
Outsourcing activity has become one of the most extensive and profitable areas in the world,
and in a crisis context, this strategy seems to be the solution for organisations who seek to
provide the same quality of services but at a reduced cost (Dinu, 2015).Dorasamy, Marimuthu,
Jayabalan, Raman and Kaliannan (2010) have identified cost as one of the most important
motivations for outsourcing. They further explain that cost saving refers to lower costs
compared to in-house production. They further outline that, globally, organizations have opted
to outsource their non-core business deliverables that are traditionally handled by internal
employees and resources; and utilise external resources to perform these deliverables, in order
to avoid huge capital investments. Khatik and Khanooja (2013) point out that capital expenses
incurred by the outsourcing relationship should also be calculated. Khatik and Khanooja
(2013) write that the purpose of outsourcing is to take advantage of service provider expertise
in non-core business deliverables with economies of scale so that organisations may reduce
their expenses and also provide better quality of services to their clients.

Effects on business process

The findings of a study by Thakur (2010) which examined the offshoring and outsourcing of
core deliverables in the pharmaceutical industry, suggest that performance does improve with
the outsourcing of core business deliverables. Results of the study indicate that conducting
clinical trials with domestic vendors is cheaper that domestic in-house. Dinu (2015) warns that
organisations that decide to outsource, must consider the benefits and risks very wisely and
take
measures to mitigate the related risks and inform their personnel regarding the
benefits of outsourcing.

Benefits of Outsourcing
Previous studies have suggested that outsourcing provides organisations with various
conomic, technological and strategic benefits, such as reducing IT operation costs, improving
technical competence and providing organisations with competitive advantages (Qu,
Pinsonneault and Oh, 2011; Lacity, Rottman and Khan, 2010). Bertrand (2011) finds a positive
correlation between outsourcing and overall deliverables. He outlines that in general,
outsourcing enables organisations to become more flexible in adjusting production to
fluctuations in market demand and to unforeseen changes. Michela and Carlotta (2011)
specify that an outsourcing strategy has several advantages, including quality improvement, a
greater focus on managing other core competencies, a greater flexibility and leverage
regarding resources, along with the possibility of entering new markets, even ones with a high
rate of development. However, Relph and Parker (2014) argue that there is a need for
commercial caution when evaluating the benefits of outsourcing. They emphasise that there
are numerous critical factors an organisation needs to consider when deciding to outsource. An
organisation needs to understand the total cost function of logistics and that costs are hidden in
areas other than just the value of transport

Risk of Outsourcing
Dinu (2015) concedes that risks have to be taken in consideration by every organisation which
decides to outsource a part of its business, as the failure of this arrangement can be very
harmful. She indicates that to obtain the complete benefits that outsourcing can offer,
organisations must be prepared for the risks and possible downfalls involved when forming
the outsourcing relationship. Although outsourcing comes with its personal set of risks, the
benefits of this
process compensate the challenges. She states that risks can be mitigated by putting in place
various protection while finalising the outsourcing arrangement, learning from previous
failures and choosing an established and experienced service supplier to make the outsourcing
project profitable. In his case study of KUSCO, Oduk (2013) points out that some of the
services outsourced by KUSCCO in an attempt to respond to the changing internal and
external environment indicated an over reliance on outsourcing when it was not viable. When
carrying out an evaluation of the relevance, as well as the quality of training offered by
external consultants compared to that of internal employees, he found the outsourced training
was lacking in relevance. Consultants employed lacked knowledge and their consultancy fees
were prohibitive. Lacity and Willcocks (2014) conducted a study in the BPO industry and
found that
the present generation of BPO clients expects more from BPO service providers
than upfront cost savings and “green” service levels. Maelah et al. (2010) are also of the view
that the decision to hand over functions to external vendors leads to risks including loss of
managerial control, and, in instances where data confidentiality is concerned, risks regarding
security
V. Outline of the Proposed Structure of the Dissertation
CHAPTER 1: INTRODUCTION
1.1 Background of the Study
1.2 Research Problem
1.3 Research Objectives
1.4 Research Questions
1.5 Significance of the Study
1.6 Research Structure
CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
2.2 Contributing factors of outsourcing
2.3 Outsourcing Practices(Innovation, Technology,Performance)
2.4 Logistics Outsourcing
2.5 Logistic Services
2.6 Risks in Logistic of outsourcing
2.7 Profile of the study Area
CHAPTER 3: Conceptual Framework & Hypotheses Development
3.1 Introduction
3.2 The Conceptual Framework of the study
3.3 Development of the Research Hypothesis of the study
CHAPTER 4: RESEARCH METHODOLOGY
4.1 Introduction
4.2 Data Collection Methods
4.3 Description of the Econometric model estimation of the study
CHAPTER 5: RESULTS AND DISCUSSION
5.1 Introduction
5.2 Descriptive summary of the Study
4.5 Results on the effect of outsourcing practices on firm’s performance.
4.6 Discussion of the results and findings of the Study
CHAPTER 6: SUMMARY CONCLUSION AND RECOMMENDATIONS
6.1 Introduction
6.2 Summary of Findings
 6.3 Conclusions
6.4 Recommendations
6.5 Limitations of the study

REFERENCES
APPENDIX

IV. Methodology
This paper will use the case study of South Africa from a macro point of view. An econometric
model will be used, as it seeks to find out the changes in the following variables , which
include employment, investment, technological innovation. Other data will be collected in the
form secondary data. The study will seek to find both positive and negative effects as a result
of Outsourcing Practices.to draw conclusions.
Ⅴ. References (at least 10)
Dinu, A.M. 2015. The risks and benefits of outsourcing. Knowledge Horizons.
Economics,
Dorasamy, M., Marimuthu, M., Jayabalan, J. Raman, M. and Kaliannan, M. 2010.
Critical factors in outsourcing of accounting functions in Malaysian small medium sized
enterprises (SMEs). Kajian Malaysia,
Khatik, S. K. and Khanooja, G. S. 2013. Cost effectiveness of vehicles by
outsourcing: a case study of City Circle Bhopal, M.P.M.K.V.V. Co. Ltd. Indian
Journal of Commerce and Management Studies,
Qu, W. G., Pinsonneault, A. and Oh, W. 2011. Influence of industry characteristics
on information technology outsourcing. Journal of Management Information
Systems,
Lacity, M., Rottman, J. and Khan, S. 2010. Field of dreams: building IT capabilities
in rural America: industry insight. Strategic Outsourcing. An International Journal,
Bertrand, O. 2011. What goes around comes around, effects of offshore
outsourcing on the export performance of firms. Journal of International Business
Studies, Michela, P. and Carlotta, M. C. 2011. Outsourcing strategies: how to formalize
and negotiate the outsourcing contract. Annals of the University of Oradea:
Economic Science, Relph, A. and Parker, D. 2014. Outsourcing: a strategic risk. Management
Services, Lacity, M. C. and Willcocks, L. 2014. Business process outsourcing and dynamic
innovation. Strategic Outsourcing,
Maelah, R., Aman, A., Hamzah, N., Amiruddin, R. and Auzair, S. M. 2010.
Accounting outsourcings turn back: Process and issues. Strategic Outsourcing