CRITICAL APPRAISAL

Outsourcing decision processes: A case study of a Malaysian firm

This paper presents a critical appraisal of the case study Outsourcing decision processes: A

case study of a Malaysian firm by Noradiva Hamzah, Aini Aman, Ruhanita Maelah, Sofiah

Md Auzair and Rozita Amiruddin. This paper aims at providing insight regarding the

research design, methodology and findings of the authors.

Authors

It is imperative to question the qualification, expertise and academic background of the

researchers. This allows the reader to build confidence about the researcher’s ability to meet

the study objectives. However, a study or research should not be entirely evaluated or

discarded in view of the qualifications and research history of the authors (Bluff & Cluett,

2006, p. 55). (BOOK)

Noradiva Hamzah, Aini Aman, Ruhanita Maelah, Sofiah Md Auzair and Rozita Amiruddin

are faculty members at the School of Accounting, Universiti Kebangsaan Malaysia, 43600

UKM, Selangor, Malaysia (Hamzah et al, 2010).

These researchers have had their research published in the past as well. The authors were

facilitated by the university to undertake this research and hence they could proceed freely at

their own pace with a broad horizon of study with defined parameters of their choice.

Title

The title of a research paper holds a lot of significance and thus the authors should pay due

consideration in giving title to their work. The title should be brief, concise and self-

explanatory so that the readers can understand the study objectives. (Newell & Burnard,

2006). The title of the paper in consideration is very effective in this regard. It may not be a

catchy title but it includes all the significant concepts discussed in the study like ‘decision’,

‘outsourcing’ and ‘processes’. The title explicitly tells the readers what the paper is going to

discuss, hence a good way to title the paper.

Abstract

The abstract of a paper should also be comprehensive enough to give the most insight about

the study in question making use of minimum words. The authors haven’t made use of flashy

words in the abstract, yet they have been able to explain the salient features of the research

paper. An abstract should be able to define the purpose, methodology and findings of the

study (Punch, 2009, p. 22). BOOK

The abstract of this paper sheds light upon the drivers of outsourcing accounting in an

organization and also how this outsourcing is raising concerns for the modern day companies.

Purpose of the study has been provided in the abstract to ‘understand the drives and processes

in accounting outsourcing’ with particular focus on a Malaysian company. Methodology has

been highlighted by stating that interviews were conducted with vendors and clients. The

findings have also been touched upon by concluding that there is no firm foundation used by

the company to evaluate its outsourcing decision.

Introduction

Noradiva Hamzah, Iain Aman, Ruhanita Maelah, Sofiah Md Auzair and Rozita Amiruddin

have been careful enough to present relevant historic findings in the introduction of the paper.

They also discuss the research question and purpose of the study. Traditionally, a good

introduction should comprise of study objective, background of the area in concern and also

the context in which it is discussed (Flick, 2009, p. 23).

The authors tend to explain in the introduction that the two main objectives of this paper are

to understand why Malaysian companies choose to outsource their accounting practices and

how they actually do outsourcing. Information has been provided in the introduction about

the background of the practice in question. This includes consideration of outsourcing in

logistical functions and repercussions of outsourcing decisions. The Malaysian business

environment has been discussed in particular by providing insights into how businesses in

Malaysia handle their outsourcing decisions. The research questions are also discussed in the

introduction.

Research Method

The title of this paper is explanatory of the research method followed. It is a case study. In

addition to being a case study, there have to be factors in a paper that further assist in

determining the course of study, approach and methodology adopted to critically understand

the case study. Case studies have known to be of three different types such as the intrinsic

case study, the instrumental case study and the collective case study. The instrumental case

study is done to present a broad understanding of a fact using a particular case (Punch, 2009,

p. 54). BOOK

This study can be categorised as an instrumental case study that tends to explain the

outsourcing decisions with particular reference to the case of a Malaysian firm. As explained

in the paper too that there has been a lot of work done on the decisions of outsourcing in

organizations and how these decisions impact the operations of firms. Thus this paper does

not develop some theoretical concept. Instead it focuses more on the verification of

theoretical validations. It can be said that a mix methodology has been used, the mix

comprising of both the qualitative and quantitative methods. Greater bent is towards the

qualitative approach. (Young, 2009).

Much of the findings presented in the paper have been formulated based on the scholarly

work of earlier researchers. Therefore it cannot be viewed as the subjective assessment of the

researchers. This qualifies the study to be more objective and increases the generalizability of

the findings of the research. (England, 2007).

Participants

The study clearly mentions the participants of the research and their particulars. The two

businesses involved in this research include the local Malaysian firm (client) and its local

outsourcing firm (vendor). Interviews and observations have been used as the possible

information sources. In total 14 interviews were conducted with the accountant, head of

corporate service division , head of finance and administration of the client firm and a senior

project manager from the vendor firm. The questions asked from each personnel were

tailored in a subjective fashion to know the dynamics and impacts of outsourcing in context

of the individual's professional background. The few involved participants may not be giving

the exact picture of the consequences of outsourcing. (Drapeau,, 2002).

Data collection and Analysis

In different types of research conducted, the aim is to draw analysis from the relevant data to

add to the concept in question (Shank & Villella, 2004). The data collected through

interviews has been merged with the findings regarding outsourcing decisions from the

literature. The tables generated about the drivers of outsourcing explicitly explain the

different variables involved in outsourcing decisions and the relevance of each variable.

Ethical Approval and Issues

Research today has to have strong ethical basis to qualify as effective. It is the duty of the

researcher to safeguard the privacy of the participants (Punch, 2009, p. 86). This paper was

published in the year 2010 and therefore it is expected that much of the ethical requirements

are met.

The paper however, itself does not give any indications as to what ethical guarantees have

been issued to the participants. The interviewed participants have mainly been professional

individuals hence a big concern for them would be the confidentiality of any information that

they provide. It can be assumed that the informed consent of the participants was involved.

Findings and Discussion

The research is a qualitative study and hence much of the findings have been clustered

together to draw upon results. Large portion of the findings have been derived from existing

literature and hence take a more narrative form in description.

It has been found that Depro has no sound base for assessing the outsourcing decision. It

would not be wrong to conclude that the outsourcing decision has been made to reduce costs.

Improvement driver is the primary force behind this decision to minimize the fixed costs by

outsourcing the accounting function. Depro, makes use of fund that was obtained from the

government to upkeep its operation. Issues of confidentiality and public money will have to

be taken into consideration. The company to be outsourced to also needs to be analysed very

critically. There have been areas that Depro has failed to undertake:

Should the company strive to maintain and build its capability in a particular activity

or turn to the best-in class source?

If there is a disparity between the company and supplier, how much investment is

required internally to match the capabilities of the supplier?

It has been indicated that Depro is not accomplishing the required benefits from outsourcing.

Its outsourcing decision is driven primarily by the motive to reduce short term costs (Bluff &

Cluett, 2006, p. 98, 105). BOOK

Conclusion

The conclusion of the research provides very objective results based on the literature. This

study satisfies both the queries of the research; it covers both the reason for and the method,

used by firms, to outsource certain accounting activities. The study establishes that a firm’s

decision to use formal budgeting depends on its size. The outsourcing decision process

incorporated by Depro did not go along the structured framework. Depro decided to

outsource the accounting function because of concern for low costs and also lack of

availability of sufficient staff. Depro did not undergo cost and benefits analysis before

deciding. The resulting decision to outsource primarily came from its close affiliation with

one of the local outsourcing dealer. The company’s top management was committed on the

general reimbursements of outsourcing that could be gained by outsourcing its accounting

work to BPA. Practically, this paper delivers comprehensions of the outsourcing decision

process in a Malaysian company. The outsourcing decision should be treated as a vital

business decision and cost analysis and risk analysis should be done to evaluate the external

capabilities versus the internal capabilities. However, in construing the results, the restraint of

this study should be recognized. As with other case studies, the use of one company limits the

capacity to generalize the outcomes to larger population of small service firms. The kind of

business functions that companies choose to outsource and the reason they outsource may

contradict and may also be inclined by their leader’s political and cultural influences (Shank

& Villella, 2004).

Additional Questions

Does this study use a theoretical or conceptual framework?

The paper clearly chalks out its theoretical framework by referring to specific theories that

the authors have made use of in building their findings. The authors talk about the six step

outsourcing process model as suggested by Choudhury as well as by Lee and Kim. In

addition to that, the paper makes use of the Fill and Viser’s outsourcing framework and thus

considers contextual factors, strategy, and structure as important variables. The first part of

the framework develops contextual factors that consider both quantifiable and non-

quantifiable criteria of external and internal factors. The second part of the framework

concerns with strategy and structure. Hence the theoretical and conceptual framework has

been used (Gray, 2009).

Is the study Qualitative or quantitative?

Quantitative research is characterized mainly with numerical data and qualitative research is

expected to explain findings in the form of words (Gray, 2009 & Smith, 2009). Research

today is mostly a mix of these two forms but there is literature that suggests that these two

types of research cannot overlap.

The paper presents its findings making use of both the quantitative and qualitative criteria.

Quantifiable criteria are costs, increased cover of fixed costs, investments and revenues.

Non-quantifiable criteria are of strategic interest, confidentiality, linkage with operations, and

stability of employment, management and dependence on suppliers. However, based upon

the methodology and findings of the paper we can conclude that it has greater bent towards

qualitative research (Thomas, 2009).

What paradigm is used in this study?

The theoretical structure of a research paper can also be termed as its paradigm. A paradigm

usually begins with a research question which is answered through the findings and

methodology of the paper (Punch, 2009, p. 87). This paper is structured on the dual approach

of making use of both the qualitative and quantitative methods instead of being based on

some particular methodological stance.

What are the purposes of this study?

Noradiva Hamzah, Aini Aman, Ruhanita Maelah, Sofiah Md Auzair and Rozita Amiruddin

have intended to analyze the outsourcing decision of firms in general with particular

reference to the case of a Malaysian firm. In addition to the specific mention of the firm

under study, theoretical background has also been touched upon. This study would come

under both a descriptive as well as an exploratory study as the author mentions in the very

beginning of the paper that work of same nature has not been produced in profusion.

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