Global Sourcing of Services: Risk, Process, and Collaborative Architechture

The global sourcing of services offers high returns but is also associated with high risks. The extent to which firms engage in ‘transformational’ global sourcing (i.e., global sourcing implying considerable changes in the home organization) chiefly depends on management's comfort zone which, in turn, is determined by managers' risk perceptions, risk tolerance, and ability to employ risk-reducing measures. Many firms move into transformational global sourcing more or less deliberately. However, as the human asset specificity of the global sourcing operation increases, managers find themselves out of their comfort zones and a desire for a new collaborative architecture arises. An illustrative company case exemplifies the process of establishing such a collaborative architecture.