Standardizing the process of sourcing external resources in knowledge and project based organizations

Abstract

The world of sourcing and critical core competences of organizations are currently evolving and changing rapidly. More and more organizations depend on expertise and knowledge of their employees especially in consulting and project based business environments. Managing human potential and resources is becoming the most important asset to many organizations. As business environments are transforming to more agile and quicker, organizations need to be able to offer a wide portfolio of expertise and response different customer needs flexibly. Business environment is shifting to a stage where organizations want to focus on their core competencies which form their competitive advantage and find alternative ways to produce less meaningful and valuable tasks by outsourcing them or using for example subcontractors. On the other hand, organization can also gain competitive advantage through effective value co-creation. Whether to use internal or external resources to a project or maintenance work has formed a key question to many project and knowledge based organization. These decision-making processes to optimize utilization of labour or materials are called right-sourcing. In this master’s thesis, research focuses on availability, capability and profitability aspects of right-sourcing expertise and knowledge. Objective of the research is to understand how to optimize and standardize the process of sourcing external resources in knowledge and project based organizations. To achieve that, it is crucial to understand elements and decision-making chain behind these processes. In order to reach these objectives, the research is conducted in two parts: literature review and empirical study. With the literature review foundation and common understanding of the topic and areas such as competence management, strategic sourcing and value co-creation are gained. Following that the empirical study focuses on a case study approach and information collected from semi-structured interviews executed with case company’s employees. The research is made for a large Nordic IT-company which is used as the case company in the research. The company is specialized in information management, applications, platforms and analytics mainly in Finland and Sweden. This research addresses many aspects of traditional sourcing and by combining them together with the competence management and human capital thinking these aspects can be transferred to context of this research. Based on the interviews, current state of the case company’s sourcing processes is formed, and potential development areas and concrete action points are designed and presented in eight categorizes. As a second main result of the re-search, a framework for external resources right-sourcing is produced based on a combination of sourcing frameworks presented on the literature review and insights found on the interviews. Results of the research mainly focuses on the case company’s point of view. However, literature review and designed framework provide valuable insight to many organizations and their decision-makers.