Performance measurement in business process outsourcing decisions

Abstract

Purpose Outsourcing research has identified that permanently governing and controlling the outsourcing provider is essential for a successful outsourcing engagement and has prioritised performance measurement systems as the most important tool to support governance and control. The purpose of this paper is to present four outsourcing contracts and conducts a detailed analysis of their performance measurement systems. Design/methodology/approach The paper is based on case study analysis of four outsourcing projects. The performance measurement systems of these projects are analysed and interpreted against the balanced scorecard concept. Findings Major findings of the cross‐case analysis are that almost only performance measurement systems based on the business process perspective were found. This structure is primarily determined by the underlying contract and compensation model. Links to the strategic objectives of the outsourcing project are missing. Research limitations/implications The research is based on four cases and presents exploratory findings. These have implications towards future research, where a wider set of outsourcing decisions needs to be analysed. Originality/value The paper contributes to a better understanding of performance measurement systems that are implemented at outsourcing engagements in practice.

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