Outsourcing is an increasingly popular method of achieving performance improvement. However, the results have been mixed. Some organisations have not achieved the desired benefits associated with outsourcing and experienced outsourcing failure instead. This research project examines the issue of performance measurement in the outsourcing decision.

The analysis undertaken focused on performance measurement in the outsourcing process, both at corporate strategy and process level. Process level analysis is growing in importance as organisations increasingly outsource complex processes including finance, human resource management and information technology. The research was undertaken at a UK financial services organisation (FSO) over a four year period. The research focused on a number of processes that this FSO had outsourced and examined how performance measurement considerations could be better integrated into the outsourcing process.

The researchers developed an outsourcing framework designed to overcome the major weaknesses of outsourcing. This followed an extensive literature review and a series of structured interviews with senior managers from a range of business functions and a number of organisations. This framework employs tools and techniques that allow organisations to integrate performance measurement considerations into the outsourcing process. It provides guidelines on deciding whether outsourcing is appropriate and, if so, how the outsourcing process should be managed in order to improve performance.