The Need And Importance of Outsourcing for Medium Companies

Question: Discuss about the Case Study for The Need And Importance of Outsourcing for Medium Companies. Answer: Introduction According to Quadnt (2012), in recent years, outsourcing has become essential to medium sized companies that need to compete in the modern world of business. This is due to technological innovations and advancement; as a result, the competition between the companies that innovates technologies is high because the medium companies are also looking for vendors with quality services to meet their desired expectations. Moreover, D (2014) added, in this modern epoch, it is believed that most of the companies are required to adapt to globalization, they may also tend to be forced to pay attention on their central objectives. D (2014) stated, Companies are required to specialize, minimize operation cost and increase their competitive advantage in their respective markets. Ying (2000) defines outsourcing in the following manner outsourcing as a contractual agreement between the customer and one on or more suppliers to provide services or processes that the customer is currently providing internally. Koszeweska (2004) further pointed out the major difference between outsourcing and other purchasing agreements, whereby in outsourcing the customer or consumer contracts-out a part of their internal activity to an external source. K.M (2000) says, Despite the dramatic rise in outsourcing in recent years, few empirical investigations of the subject have been conducted. K.M (2000) further added that work on outsourcing has been primarily theoretical in nature has relied mostly on subjective evidence support assertion. According to Quadnt (2012), as much as outsourcing is advantageous for companies, it also bears dangers such as; security and intellectual property rights are more prone for violation. There can be chances of higher risks in case of failure but at the same time, if such initiatives are successful they can lead to decent amounts of earnings and profits, In this paper I will further discuss about the risks and benefits; outweighing and comparing them in the literature review section of the paper. This paper is set out to examine the outsourcing decision by MIC Tanzania LTD, a cellular network company in Tanzania, popularly known as Tigo through examining available documents and interviewing key personnel at Tigo Tanzania. The gathered information will be analyzed and come up with the advantage and disadvantage of outsourcing. As a result, this paper looks into the case study of MIC Tanzania LTD (Tigo) from which results will be analyzed. Aim of the study The aim of the study is to understand the recent trend of outsourcing. The focus is particularly given to the medium sized companies. In this case, the outsourcing process of Tigo, the telecommunication company of Tanzania will be discussed. it is seen that large software companies are involved in outsourcing over the last decade, however, the medium sized companies are also coming forward and they have started outsourcing some parts of their software related developments. There is a difference in the operational and managerial level between the medium and large enterprises. This is the reason that most of the outsourcing job that they do is neglected. Through this research, the outsourcing done by Tigo will be highlighted on the ground of the need and importance of outsourcing in modern day business. Objective of the study The objectives of the study are as follows: To discuss the process of outsourcing in Tigo To analyze the need and importance of outsourcing in Tigo To analyze the developments of outsourcing in Tigo To discuss the difference in the process of outsourcing in the in the large and medium sized companies like Tigo Research questions The research will be based on these following questions: How Tigo operate outsourcing? Why outsourcing is important for the medium sized companies like Tigo? How the process of outsourcing has developed with time in Tigo? What are the differences in the process of outsourcing in between Tigo and other big enterprises? Through this assignment, all these questions will be answered in detailed discussion and analysis. Literature review Tigo is a telecommunication enterprise situated in Tanzania. The brand has gained popularity due to its updated style. The service offered by Tigo includes vhigh speed internet, mobile financial services, SMS, Voice. The 3G network of Tigo has rarely found any competition across many countries in Africa. In 2015, the brand extended with the launch of itsG network. The company is looking for further development through penetration in remote and rural areas. According to Schniederjans et al (2015), apart from all these, the company has employed more than 300,000 Tanzanians both directly and indirectly by extending customer service network, money merchants, distributors and sales agents. Since 1994 to the present day, Tigo has been following the right way to success and the process of outsourcing plays a major role here. The following discussion will bring out the ways outsourcing has helped Tigo to get what it has planned to beat the other competitors in the business. However, some the ories related to the process of outsourcing is need to be analyzed for the better understanding of Tigos activities and it will also outline the present situation of the modern day business. Theoretical underpinnings The definition of outsourcing will not be repeated in this section; rather a thorough research on the same area has been examined. With the passage of time, Outsourcing has become a major part of business. Every company incorporates this business process into its strategy. However, the focus of this assignment would be to gauge the advantages that the organizations are achieving through the process of outsourcing, and the disadvantages, if any, they have to face. This section will look on these advantages and disadvantages of outsourcing and compare outcomes between findings and literature reviews. According to Graf et al (2013), outsourcing has developed with the growth of digitization. In the present situation, digital outsourcing is what every company does. Digital outsourcing, which is related to manufacturing, has been growing since early 21st century. Mainly the white-collar work is outsourced in various countries. However, there is a disparity in the wages between the Eastern and Western countries. As discussed by Ali et al (2014), whereas in US and Canada the workers are paid around $40,000-$100,000, in India and China the software engineers get around 250,000 and 1,5000,000 rupees per annum. It is half the amount of what the US and Canada pays in a year to each of their employees. Nevertheless, the main question is, are there any benefits of outsourcing? Quandt (2012) answers that in order to compete with other companies; a company is expected to do its best to acquire the most useful sources from different channels and to build its sustainable comparative advantages b y different approaches. Quandt (2012) further adds that if there is something we cant do more efficiently, cheaper and better than our competition, there is no sense in doing it and we should employ someone to do the better work for us. According to Loewe et al (2013), Outsourcing may involve outsourcing of jobs to another country or establishment of stores in other countries, although the analysts prefer to term the trend as off-shoring. The employees who work for the same company but in a different country are the company employees. This is a very confusing situation. They are not considered outsourced. As discussed by Christaukas et al (2012), the economists have made their standpoint in this context. They do not want to distinguish between employee outsourcing and product outsourcing. They do not consider the national borders too. According to Mehra et al (2014), after World War II, business became global with some new developments. With this new advancement, new outsourcing ide as grew. As discussed by Kaya et al (2015), the establishment of remote management services in 1980s was among this. According to Fernie (2014), it was during the late 1980s and 1990s; Information Technology outsourcing started expanding due to technological advancement. As discussed by Gonalo et al (2014), the companies started outsourcing less important components and kept their resources for the major areas. This was mainly the scenario of India. As a result, United States was filled with IT workers outsourced from India. Thus, both the countries gained from it. It is believed that, surviving in this modern competitive business environment requires medium sized companies have to adopt outsourcing some of the none-core businesses. Outsourcing is a vigorous process and according to D (2014), it reduces the burden on employer who would use the some of the manpower from outsources activities to more productive core business and increase efficiency .The frequently outsourced activities in telecommunication companies include; tower management, IT, call center and walk in shops as well as passive and active part of network and concentrate on the core business. According to E (2014), companies decide to outsource for four major reasons as follows (and as summarized on diagram below): to reduce the cost, focus on core, improve Quality and increase speed to market (The Outsourcing World Summit, 2001). However, the economists have opined that a company that spends lower marginal costs during the production of services or products always enjoys a compar ative advantage. It leads to productive economy. According to Freytag et al (2012), outsourcing helps to gain a perfect level of popularity as it seeks a third party for working on contractual basis. The primary reason for the organizations opts out for resourcing is not only to reduce the costs of the business operation, however, to involve skilled, talented and expert employees for generating perfect level of profit. Outsourcing also helps to maintain the flexible staffing process for adequate turnaround time. Now a day, it has become a trend to support the uprising business with adequate robust software program, which are web-based and it is capable enough to give a tough competition to the existing competitor companies within the particular industry. As opined by Qi Chau (2012), the management of an organization outsource its resources only because to develop the business strategy. Mainly in the software industry, outsourcing plays an important role to capture a better position in the market than its previous position. This pr ocess has been proved as more economical than the traditional process of conducting business. Outsourcing includes a huge range of technological skills, expertise and knowledge in order to meet the requirements of business. Outsourcing helps to maintain a perfect standard of an organization and delivering the projects on time successfully. Handley Benton (2012) have mentioned that the software companies incorporate outsourcing to get access of a huge pool of various expert solution and resources for improving both the business operation and the organization. Outsourcing engages a perfect and excellent quality solution at less expensive price and it can be defined as effective strategy to perform assigned tasks in traditional manner with proper handling procedure by resources and internal staffs. However, there are various reasons of choosing outsourcing by an organization. The major reasons include that it controls and reduces the operating costs with the constant development of companys concentration. Lee et al (2012) have suggested that outsourcing achieves a perfect and potential access to the excellent capabilities. It also frees the significant internal resources for performing other purposes and increasing the potentiality for activities that are time consuming. Outsourcing involves a maximum usage of external resources and it shares the possibilities of risks with the present partner organization. However, all these above-mentioned reasons are not always enough to implement an outsourcing program in successful manner. Every organi zation should ensure and consider significant components, which are able to mitigate the need of successful outsourcing. Executive support and potential communication process is relevant segment of successful outsourcing process. According to Aubert et al (2012), the higher management of an organization should be aware of the managing transformation as it is the fundamental requirement for the success of the outsourcing program. The below diagram summarizes the reasons for outsourcing:- Source: (The outsourcing world summit, 2001). Outsourcings benefits and risks Koszeweska argues that the most often discussed advantages of outsourcing are connected with improved financial performance and various nonfinancial performance effects, such as a heightened focus on core competencies (Koszeweska, 2004) argued that outsourcing firms are likely to achieve cost advantages relative to vertical integrated firms.Iit can be seen that Outsourcing reduces various costs that a company bears. According to Harrigan (1985), such as- non-core business costs, high energy costs, labor costs, high rates of taxes, government regulations etc. The U.S companies enjoy high corporate taxes and certain benefits including Medicare, social security. Data has shown that in 2011, US corporations spent less money to pay federal taxes and more to the CEOs. Such a favorable tax environment in U.S has encouraged the outsourcing of IT jobs. U.S, therefore, seeks to gain profit in other countries rather than shifting their headquarters in foreign countries. As discussed by Dinu (2015), non-wage costs are another reason for the rapid growth of outsourcing. In case of U.S, the other developing countries have ensured lenient rules regarding the workers benefits and their securities. This is not the case in U.S because of the increasing social security and crises in Medicare that have compelled the companies to think and plan about outsourcing. Those working in the IT industry in U.S get the benefit of health insurances. Therefore, they try to avoid recruiting employees and they give pressure on existing people. However, this is not the case while they outsource employees in foreign countries. As opined by K.M et al (2000), outsourcing tends to promote competition among outside suppliers, thereby ensuring availability of higher- quality goods and services in the future. Koszeweska (2004), opined in favor of outsourcing by talking about the following advantages such as reducing overheads and operational costs, possibility of converting fixed costs into variable costs, concentrating on firms core business and the ability to spread commercial risks. As mentioned above this paper considers both the advantages and benefits of outsourcing along with the risks and drawbacks. The disadvantages or risks of outsourcing are therefore also covered. According to K.M et al (2000), one of the most serious threats resulting from reliance on outsourcing is declining innovation by the outsourcer. Outsourcing can also lead to a loss of long run research and development competitiveness because it is normally used as a substitute for innovation. According to Koszeweska (2004), other disadvantage of outsourcing is the risk of co-operating with a dishonest supplier, which, having gained access to knowledge concerning a firm and its products may use it against that firm in the future. Outsourcing in medium-sized companies In Germany, the medium enterprises are the source of the national economy. The revenue that they generate and the employees that work in these companies are the reasons of their developments in the recent years. Most of these medium companies of Germany and other countries run by their traditional set up. The owners of these companies take the final decisions because of which emotion influences the process of decision making in those medium enterprises. The process of outsourcing also has its role to play here. However, the medium enterprises in Germany are acknowledged as the ideal business set up to be followed by other such companies around the world. German economy has developed with the growth of such medium enterprises. As discussed by Bamiatzi et al (2014), all Medium software companies take the decision of outsourcing only when the customer orders for software. The companies then discuss about decision making on outsourcing. According to Moe et al (2012), this process is known as before the project. The decisions are based on the services that they can provide to meet the specific demands of the customers according to the budget that the customers can spend. The budget estimation is done during the selling process. Thus, there are three stages or three temporal aspects of decision making for outsourcing. These are as follows: Before the project During the project Always Outsourcing It is found that the decision-making responsibility lies on the managers for most of the medium sized enterprises. According to Benito et al (2013), some companies outsource the development of particular software products and in some other cases; the enterprises transport the software project to an outside partner or to the counterpart of their own organization residing in a different country. Therefore, the three types of objects that are outsourced are as follows: Development of particular software elements Software development projects Development of particular requirements According to Hossain (2015), the medium enterprises gave importance to the decision making process before they actually outsource anything. The features of software components that are considered as parameters in the process of decision-making are as follows: Need for explanation Complexity of components Technical Specificity Clear Interfaces Core Topic Required Domain Knowledge Isolation of Components Encapsulation Number of used Technologies Anything can be outsourced Among these characteristics, need for explanation seems to be a concern of the medium enterprises on which the decision making process depends a lot. They do not need to explain much if they have a strong operational and organizational setting. As discussed by Gebauer et al (2012), the companies can outsource very complex things too if they understand the specific customer needs. Moreover, the understanding of the software components such as technical specificity and complexity involved in it is the primary requirements while making outsourcing decisions. Strategies or decision-making objectives differ according to the size of the enterprises. According to Dolgui (2013), the medium sized enterprises are, as opined by the European economists, those that employ less than 250 persons with a yearly turnover of less than 50 million euro and/or with a yearly balance sheet not more than 43 million euro. However, in the emerging market economies the operations and supply change management has become a major part of their business decisions. For example, the emerging market in the BRICS countries. The medium sized enterprises in these countries plan their outsourcing decisions focusing on two primary issues. ("The Benefits of Outsourcing for Small Businesses | AllBusiness.com", 2010) These are as follows: The main objectives for outsourcing The place allocated for outsourcing To understand the need and importance of outsourcing in medium-sized enterprises, it is necessary to find out the differences in the outsourcing process. The medium sized enterprises aim at low cost quality production unlike the large enterprises with abundance in financial support. Outsourcing helps them to achieve it. The differences are operational while setting the objectives for outsourcing. To cite an example, as discussed by Willcocks et al (2013), the larger enterprises of footwear and textile subcontract mainly from the neighboring regions or from a poorer country. On the other hand, the medium sized countries lag behind in the competition because their abilities are embedded in the local knowledge system. Increased outsourcing internationally can actually accelerate their competency level. Outsourcing benefits for Tigo In an emerging market situation in African country Tanzania, it was important for Tigo to expand in other countries of the same continent for the development of its business, and they have planned the extension of market very well. Outsourcing involves third party intervention and Tigo has built partnership with Jumia. Jumia is an online shopping destination. The product ranges from food to house, car and jobs. Being a telecommunication system, it has enabled the online service easy for the specific customers. As it is found, the objectives or Tigo for outsourcing can be pointed out. Customization of service Utilization of digital marketing Tigo has also made partnership with Kupatana.com for easy online business transactions. The primary objective behind this partnership is to promote and sell others products and services online. This is nothing but the expansion of an industry. The organization entered into many such business partnerships for the sake of expansions. For example, in 2016, Prime Time promotions joined Tigo as their partners. Such a well-planned joint collaborations have increased the reputation of Tigo and many people seek to work for them. The workforce willing to serve under Tigo can belong to any form of diversities. Tigo has mentioned that people from different nationalities can join them as employees. In the annual report, 2015 of Millicom group under which Tigo operates estimated 7.4% organic growth in its revenue. Surely, Tigo is moving ahead very strong in African and Latin American countries with its systematic outsourcing strategy to sustain in an emerging market. ("Millicom | The Digital Lifestyle", 2016) 3. Research Methodology Sampling I purposively chose Millicom International Cellular S.A. (MIC), because the company is the first cellular network in Tanzania, established in 1994. According to K (2014), the brand name is Tigo and it provides the most affordable, widely accessible and readily available prepaid cellular service to more than7 million customers in Tanzania. Tigo Tanzania has more than 500 permanent Staff. I undertook the main task of exploring the companys outsourcing activities. Focusing on finding out if there was a need to undergo outsourcing process and what types of activities in the company have been outsourced. The research went further to study the two key areas, before outsourcing and post outsourcing decision and the impact to the company. I employed qualitative techniques for data collection and analysis. I collected data through review of available documents, questionnaires, and a series of face-to-face interviews with head of departments and line managers and non-managers employees of Tigo, Tanzania limited. This allowed me to have access of information from all affected parties and the decision makers i.e. the senior management team who were directly involved in outsourcing action and the evidence of employees who somehow affected directly by the process i.e. the former employees who worked on outsourced activities. As already stated, more than seven million customers in Tanzania are highly benefitted and facilitated with the prepaid cellular service of Tigo. Sampling technique is one of the most effective processes of collecting necessary data and information amidst large number of population. The benefits of maintaining outsourcing and the impact of outsourcing on the companies are the primary concern of this particular study. According to Bharathi Kumar, (2013), however, in order to collect necessary data and information, the importance of sampling technique is truly undeniable. Sampling technique is constituted with two types including probability sampling technique and non-probability sampling technique. Probability sampling technique involves a large number of people instead of being specific. A large number of employees from several departments have been involved for providing appropriate data and information. This specific research primarily focuses on two particular areas that include the impact of outsourcing in the realm of primary techniques and the factors affecting the scopes of outsourcing methods and techniques. On the other hand, the concept of non-probability sampling technique is completely different. According to Teirlinck et al (2013), in non-probability sampling technique, the analyst has to be specific while collecting necessary data and information. As discussed by Jan et al (2016), Tigo being a cellular brand is primarily concerned with satisfying the demands of the customers by maintaining a balance in demand and supply. Therefore, the customer service department is the primary focus for this research work from where the source of authentic data and information can be collected. As opined by Die et al (2012), Tigo tends to deal with 7 million customers in order to fulfill their needs and demands by providing effective cellular service process. Therefore, this particular research provides an in-depth understanding and knowledge regarding the challenges and obstacles that the customer executives of Tigo have to face day-by-day. For this specific research work, probability-sampling technique has been selected in order to accomplish the entire project successfully. With the help of probability sampling technique, more than 250 employees of Tigo have been selected for gathering necessary information regarding the outsourcing policies of Tigo. They have provided immense data about the business strategies of Tigo based on which this organization is occupying a predominant place in the realm of telecom industry. A number of staff interviewed is as shown in the (Table 1 below) Selection of Respondents The number of staff interviewed is as shown in the (Table 1 below) Selection of Respondents Table 3: The number and position interviewed personnel General Manager/CEO 1 Senior Managers 5 Line Managers 4 Non-Managers 4 As shown above, 14 people were interviewed grouping the interview questions into two categories, for the General Manager / Senior Managers and non-managers. Factors used to formulate questions were based on; 1) Decision makers who decided to implement the process 2) The recipient group and their reaction towards the process Data Collection I collected the data using mostly face-to-face interviews because most of the interviewees were available for interviews. The procedure was trusted because it could stimulate rich more information from the selected candidates on time and feel one's reactions. The interview questions were open ended to allow the interviewer to get as many information as possible. The face to face interviews were conducted in a period of two months. All interviews were tape recorded to capture the informant's words and for the future use of data collected if need be. I asked for their consent to use the position and names in the study, and all agreed. Most of critical questions I posed them to the CEO of the company, The Chief Financial Officer, The Head of Technical Operations, The Head of Customer Operations and The Chief Information Officer. In the analysis section, I will come up with the conclusion subsection, which will then be the basis of my findings. Data collection is the systematic procedure based on which the relevant information and data have been gathered from various reliable sources. In order to conduct the entire research successfully, the can be collected from two main sources that include primary source of data and secondary source of data. As Fauzy et al (2015) explained, primary data has been collected from various surveys, interviews, group discussion, focal group and so many. On the other hand, secondary data are collected from numerous books, journals, newspapers, magazines, online websites and so many. For this particular research, primary source of data has been chosen to be used. As discussed by Lacity et al (2014), the reason behind choosing primary source of data is undeniable. From primary source of data, the direction communication between the sender and receiver can be conducted. The receiver can get an immediate feedback from the sender. As a result, the entire communication becomes very much effective. According to Nakakita (2013), in addition, as the receiver is getting the opportunity to get an immediate feedback from the sender, a large number of information can be collected. In order to clarify any doubt, the receiver can ask an immediate question to the sender for clarifying doubt. However, primary source of data is constituted with two techniques of data collection methods and techniques. According to Liang Wakahara (2015), these include qualitative data collection technique and quantitative data collection technique. In this particular project, qualitative data collection technique has primarily been chosen for acquiring sufficient knowledge and information about the benefits of maintaining outsourcing of Tigo. Qualitative data collection technique is based on interview questions. I wanted to involve 14 existing staffs of Tigo in order to make an effective communication with them. While collecting data, I never intended to force the participants for providing additional information that are strictly prohibited by the administrative managers of Tigo. The willing participation of the employees was highly entertained for completing this particular research work. The business strategies and policies were not my primary concern at the time of conducting the interview session. The innumerable challenges that Tigo had to face while maintaining the entire business organization successfully were my key focus. According to Jayaram et al (2014), I received immense information about the advantages and the disadvantaged of outsourcing procedures for a cellular business organization like Tigo. Data Analysis The main source of data collected for this study was mainly personal interviews with the senior managers including the General Manager of the company. All the staff interviewed was presented with the questions prior to a meeting. I relied on this procedure because I believed I will get direct answers through discussions with the selected candidates. The interview questions were open ended to allow the interviewer to get as many information as possible. The personal interviews were conducted in a period two months a 14 staff were interviewed. All interviews were tape recorded to capture the informants own words and for the future use of data collected if need be. In the results findings, all the information gathered are well explained and I will have a conclusion remarks where all the objectives of the study will discussed as well. The entire intended group for interviews and discussions gave me maximum support. I was able to collect as much information as I wanted. Almost all the dat a and information I wanted was provided for. As mentioned, all the findings and conclusions are being covered hereunder. After conducting an in-depth conversation with the CEO of Tigo, it can be evaluated that outsourcing is able to facilitate a business organization in order to spread their wings in various geographical areas. As discussed by Thompson et al (2013), people of different boundaries cannot acquire an in-depth overview about the reliability of the product of that particular organization. Therefore, outsourcing has been considered as one of the most effective ways to gain the image and reputation. According to Cavusgil et al (2014), apart from the CEO of Tigo, five senior managers have also been involved for sharing their point of views regarding the facilities of outsourcing for a specific business organization. As discussed by Pollack (2013) among five senior managers, one of the most senior managers of financial department stated that organization has to face innumerable difficulties in order to gain the trust of people from different geographical areas. Tigo is successful enough to main tain the reliability of their products. According to Tomiura et al (2013), however, as per the point of view of fourteen employees, one of the marketing executives stated that digital media is the primary source of maintaining promotional activities of Tigo. Randa (2015) opined that in order to draw the attention of various customers from different geographical boundaries, Tigo has stated outsourcing for spreading their wings in international market. As discussed by Hassanain et al (2015), after making entire data collection procedure, it is evident and clear that I have received immense co-operation from the managers as well as from the existing staffs. The way they have supported me throughout the entire data collection method is truly commendable. I had made an effective conversation with the managers of Tigo more than ten minutes. As a result, immense data and information have been gathered on this particular research issue. The sources that I had applied for acquiring knowledge is most reliable and authentic so that r eaders do not have to lose their trust. Results/Findings In this section, the results that are gathered from the analysis of the data will be discussed. The findings will help to reach to conclusion. At first it will be discussed how Millicom has grown over the ages, and then the detailed report will be given. Findings As discussed by Evangelista (2013), Millicom has spread in the countries of Africa and South Africa. The specific regions where they have spread their business are as follows: Central America South America Africa One can look at the report of 2014 and see the growth in its business. The revenue generated in these areas in this year is as follows: Central America- $2,460m South America- $2,956m Africa- $1,000m ("Millicom | The Digital Lifestyle", 2016) However, the report of 2015 has already been given in the previous section ofr the assignment. Tigo Tanzania started outsourcing seven years ago; we started with the customers operations department. The reason being a response to increased number of complaints from our customers for our services in our call center and customer walk- in shops the feedback from the customers were not impressive, we thought of how to improve our services, then the management came up with the idea of outsourcing the customer operations and remain with few internal Staff who will monitor the vendor activities, the aim was not to downsize the number but rather to improve the service. (D. Gutierrez, personal communications, July 10, 2014) The CEO further said, The outsourcing for customer operations went into two phases, the first phase was the call center, by then we were having 50 Staffs receiving 300 calls per day. As I am speaking to you now the number of agents who receives calls has increased from50 to 100 per shift, serving an average of 650 customers a day and now customer satisfaction is at the average of 90%. (D. Gutierrez, personal Communication, and July 10, 2014). The CEO added, we then outsourced the walk-in shops we had, including the employees working in there, we saw it necessary as we did for the call center as it showed the green light that outsourcing was possible, currently, what the company does is to identify ideal location, acquire it renovate it to our standards and brand the shops, pays rent and handle it to a vendor to sell our products, in other words, we franchise the shops , but we make sure they all maintain the same standards and the customer operations manager checking the services regularly. (D. Gutierrez, personal communication, July 10, 2014) In 2009, the IT department was outsourced, we saw it necessary to outsource this department due to the reason that, the technology is growing very fast, we did not want to be left behind technologically, hiring the experts and employ them permanently could be very expensive, the only solution we had was to hire their services while working in their countries of origin which is India. (C.Antezana, personal communication, July 7, 2014) "we had no option but to cut down the number of Staff as some of sections had to be taken by the supplier, it was not easy to break the news to the Staff who were losing their jobs, we had to prepare them psychologically and even encourage to apply jobs in other departments and the ones applied were given first priority but a good number left the company because they could not fit into other departments. (C.Antezana, personal communication, July 7, 2014) One of the affected staff who now works in other department has this to say, when we received the news, it was not easy to accept, it was like our dreams are shut, it took a month to some of my colleagues for their working mood to be activated, it was a very difficult time for us and some of my colleague have not secured jobs since then (Y. Zahor, personal communication, August 6, 2014). Outsourcing has been an ongoing process for Tigo. In early 2010 a decision to outsource its passive network infrastructure was reached, there are two types of network in technical terms, 1) passive infrastructure which includes network or cell site towers and its equipment 2) active infrastructure part of network which includes technology and people. The reason for the outsourcing was 1) to concentrate on core business processes 2) To improve the quality of the network. The CTO said in 2010 we reached more than 1300 towers from 650 that we had in 2008, the number of cell sites towers doubled, the management of towers became difficult to manage from within, and thats how the decision to outsource was reached so as to keep pace with the speed of growth we experienced (O.Russel, personal communication, July 12, 2014) The CTO added, the management of cell site towers required to buy equipment, regular maintenance, monitor fuel consumptions, pay power bills, employ more field Engineers as the cell site towers increases and pay rent to land lords where the towers are built, on the other hand, the company was responsible for planning, identifying locations to build a cell site tower and looking for a supplier to build cell site towers and Tigo do the installation and put the cell site on air. In 2011, the company identified and selected Helios Towers Africa as the ideal supplier; the deal was sealed within the same year, and the outsourcing processes began. We agreed to sell all the towers to Helios Towers Africa and lease them back holding 40% share of the business (O.Russel, personal communication, July 12, 2014). Selling of cell site towers and leasing them back has cleared all the back log we had, it was not easy to manage the towers from within, we didnt have enough resources for that but again we didnt have enough expats for that, our network quality was very poor since we had a lot at hand to concentrate on at the same time (D. Gutierrez, personal communication, July 14 2014). Our network has improved tremendously since then; there is a penalty clause which we agreed on service agreement level, below that level they are subject to penalties (O. Russel, personal communication, July 12, 2014). The head of Marketing added we no longer have to worry about managing our towers, we are now concentrating on our cobusiness processes such as sales and distribution, branding and Value Added Service, the revenue has grown to 15% from 2012 when we finally transferred all passive infrastructure to Helios Africa, (P. Diego, personal communication, July 18, 2014). The CFO commended the move of outsourcing cell site towers as one of the best decision ever made by the company, In a year time after outsourcing the towers. we experienced the serving in OPEX (Operational expenditure) and CAPEX (Capital Expenditure) we have been able to save more than 9% of expenses, and the current projections towards the end of the year the saving may reach 14% . (E.Sahoud, Personal Communication, July 21, 2014). On 12 August 2014 another decision of outsourcing was made in Tigo Tanzania, the CEO narrated that they are going to outsource the active infrastructure part of the network, he said it has been extremely apparent that our core business is in increasing our focus on improving lives through digital technologies. Having a strong, reliable and high performing network infrastructure is a key supporting element for that, and we have decided to maximize the benefits of global transformation by moving to a Managed Services model, partnering with a leading provider who will take responsibility for the running of our active network (D. Gutierrez, personal communication, August 14, 2014). I want to emphasize that unlike many operators, our key aim in doing this has been to improve customer quality rather than reduce cost. We have selected Huawei as our strategic partner. Our selection decision has been driven by quality. We have conducted rigorous due diligence on a range of possible suppliers and a comprehensive selection process. I can now confirm that we have entered into a five-year agreement with Huawei for the following: Active network operation: Radio, Transmission, Core Network, Operational Support Systems and NOC (Network Operations Center). Support and maintenance contracts Spare parts management Network modernization and Software upgrades. (D. Gutierrez, personal communication, August 14, 2014) Strategic control, Converged Billing Solution, high-level planning/design of the network including all capital expenditure investment decisions remain with Tigo. In addition a small team will be set up within Tigo to manage the contract with Huawei, and ensure that the service meets the expected standards to add on he said naturally a key element of the agreement is very clearly defined Key Performance Indicators and Service Level Agreements (D. Gutierrez, personal Communication, August 14, 2014). Further inquiries on why they chose Huawei over other companies, and his reaction was as follows; Huawei were the clear winners in our selection process. As discussed by Hirschheim et al (2013), they have a well-established presence in Africa, but most importantly are growing extremely fast. Their equipment processes and service standards are of the very highest level, and they were able to offer the best long term assurance for the staff. As discussed by Schoentgen (2012), a growing company with many other Managed Services contracts and more in the pipeline means that the career opportunities for our transferring staff are significantly enhanced. This means our Staffs have a long-term future with the chosen partner. (D. Gutierrez, personal communication, August 14, 2014) On how to deal with staff in case they resists these changes, since some of them were worried as is not easy to accept changes, he said Functions within Operations, will in due course, become employees of Huawei. Our contract with Huawei sets out protection for our employees far in excess of the legal requirements and significantly better than other managed services deals you may have read about. Our current expectation is that around 128 of our Operations staff will transfer to Huawei. Key protections include: Full compliance with all local labor laws and practices in relation to this type of employee move, including any consultation requirements A guarantee of equivalent terms and conditions of employment (salary and benefits) or better We fully understand that these changes will be result in significant questions and natural concern about the future, but we are being fully transparent and will continue to keep them informed. Conclusion As mentioned earlier, purpose of this paper was to present empirical research on outsourcing, and studying if there are a need and importance to opt for this process. A huge range of discussion about the necessity and importance of outsourcing process is elaborated in detailed manner. The global scenario of outsourcing is constantly changing and fast moving. Various leading organizations in todays competitive business world switch to the single vendors from mega contracts in multiple ways. Organizations try out innovative, creative and completely new variant of outsourcing, which is effective for the business function and it is named as multi sourcing. As discussed in Oshri et al,.(2015), the software companies generally use Multi sourcing as it includes various IT operations to multiple vendors. The process of HR outsourcing is increases in rapid manner than other kind of resources as it is becoming the buzzwords of this decade and it is in the top list of outsourcing industry. Acco rding to Gobble,.(2013), mainly the companies of Europe and U.S use HR outsource than other countries. Outsourcing has the capability to create a perfect level of job entry in a specific sector and industry. The perceived and adequate reasons behind the gradual increasing popularity of outsourcing process are very hard to discern and reducing operation costs, better expertise and great services of an organization. Outsourcing also frees the organizations from several administrative burdens with allowance HR in order to concentrate more on the existing strategic challenges that may damage the brand image and functions of an organization. According to Abbott,.(2013), the HR outsource process can be ranged to strategic consultancy from purely transactional procedures. The HR outsourcing commonly includes the administrative process in regular manner, such as data entry, payroll-processing, execution of training and recruitment programs, compensation, resume management, employee communic ation, HR data analytics, leave administration and pension plans. Some companies restrict the outsourcing process only because of the pay structure, hiring procedures, recruitment decisions and compensation that may hamper the organizational policy. Here are potential risks with the outsourcing process as it has been proved as a failure often. Outsourcing is unable to predict and define the objectives and goals before the beginning of the outsourcing process. It does not establish internal baseline against which the providers should measure costs, value additions and services. Outsourcing operates in the international market without even gaining international experience. Outsource does not involve the ultimate decision-making without collecting complete information on the internal processes and costs. Outsourcing also lacks the planning of risk assessment and analysis and the flaws to understand in critical manner the impish relationship in between the requirements of employment law and human relations for outsourcing initiative. As discussed by Ndikumana et al,.(2015), there are risks during the selection, implementation and management of outsourcing. However, the future trends in outsourcing suggests supply chain consortium, w hich will examine the scope of more risks related to the outsourcing process within particular levels of supply chain management in future. Outsourcing enhances the needs of customer satisfaction with the gradual development of core competency. According to Jamil et al,.(2013), in order to invest resources and time in the deployment and design of the proved outsourcing process will actually help an organization to avoid and ignore the potential risks of outsourcing. With the effective selection of outsourcing process, an organization can capture the desired position in the concerned industry. The analysis shows that it was vital for the company to undergo the outsourcing process because it was under the pressure of improving its performance and quality of services offered by the company. The analysis has shown that the company succeeded in its objectives, and it has continued to outsource some of its processes. However, every good cause comes with bad cause, through the process there was an affected group, the employees who lost their jobs, and some of them were not ready to be transferred to the supplier. Through the study I can conclude that global economy has reacted and assimilated to this process, therefore any company, wishes to undergo the process may wish to outline the advantages and prepare to tackle the pitfalls that might happen as there is no smooth path towards implementation of the process. 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