The Benefit and Risk of Offshoring and Outsourcing: M&S Case Study

This research project investigates the benefits and risks of offshoring and outsourcing in the context of globalization, using Marks and Spencer as a case study. The report begins with an introduction to offshoring and outsourcing, followed by a comprehensive literature review exploring the concepts within international business. The methodology section details the qualitative research approach, including research philosophy, design, approach, sampling, data collection methods (questionnaires, secondary sources), and thematic data analysis. The data analysis and interpretation section presents findings through themes, frequency tables, and interpretations, focusing on Marks and Spencer's international outsourcing strategies, the extent of their offshoring/outsourcing activities, and the specific business functions involved. The research outcomes are presented, followed by a reflection on the research methodology and recommendations for alternative approaches. The report concludes with a list of references.

Research Project

TABLE OF CONTENTS
TASK 2............................................................................................................................................3
Introduction............................................................................................................................3
Literature review....................................................................................................................3
Research Methodology..........................................................................................................5
Data analysis and interpretation.............................................................................................7
Research outcomes...............................................................................................................14
Reflection and recommendations for alternative research methodology.............................15
REFERENCES................................................................................................................................1

Research Topic : The benefit and risk of offshoring and outsourcing business in context of
globalization : A case study of Marks and Spencer.
TASK 2
Introduction
In present scenario, outsourcing is considered to be as one of the most powerful trends in
context of modern management. Offshoring can be defined as the activity of taking the function
out of nation. It is basically a type of outsourcing. The key drivers of offshoring are quality
improvement and cost reduction. Offshore outsource can be referred to as practice of hiring the
other companies to perform business functions. International outsourcing is a business practice in
which an organization hires international firm to conduct business activity for them. Strategic
outsourcing assist management to concentrate on core business function and long term growth.
Outsourcing helps an organization in exploring as well as capturing opportunities for innovation.
It provides firm an ease in smooth running of business. The major difference between two is that
offshoring is basically practice of getting the work done in different country. Whereas
outsourcing refers to the contracting of work by third party.
The research report will have focus on explaining the concept of outsourcing and
offshoring in context of international business. Study will emphasize on identifying the benefits
and disadvantages of offshoring as well as outsourcing in context of marks and Spencer.
Literature review
Concept of offshoring and outsourcing in international businesses.
According to the view of Caratti, Pinto, Scully and Perrin,(2018), outsourcing can be
considered to be as a particular type of international trade. The author Koch and Jørgensen,
(2018), argues that outsourcing is basically a purchase of products or services from outside
sources or international market. In simple words, author wants to state that an organization
purchases raw material or input from other companies located in different nation. As per the
thinking of Lioliou and Willcocks,( 2019), outsourcing can be defined as the transferring of
business functions from internal staff to outsider that is contractors. According to the perception

of Adams, Nyuur, Chima and Debrah, (2018), outsourcing can be considered to be as practice
utilized by firm for reducing costs by transferring work to outside suppliers.
According to the view of Munjal, Requejo and Kundu, (2018), offshoring is basically a
moving of different business operations to other nation for the following reasons such as cost
reduction. The author argues that, Offshoring can be considered to be as firm getting their
various services handled or managed by other organization in different nation. As per the opinion
of (), offshoring can be defined as obtaining of raw material as well as services strictly from the
business entities based in another country. According to the view of Koch and Jørgensen,
(2018), Offshoring is the most cost effective way of marking international presence.
The benefit of offshoring and outsourcing
As per the thinking of Koch and Jørgensen, (2018), cost effective services is the major
benefit of outsourcing the business activities. The author argues that Access to specialised skills
which are required for performing specific business function is the major advantage of
outsourcing. According to the perception of Kaur, Singh and Majumdar,(2018), Outsourcing
provides firm a flexibility for scaling up their business according to the requirement. The author
() argues that by outsourcing the business activity an enterprise can concentrate on competition
as well as core business function which is very much crucial in order to sustain in global
environment. As per the view of Kaur,(2018), outsourcing helps in increasing working
efficiency.
According to the thinking of Adams, Nyuur, Chima and Debrah,(2018), Reduction in the
cost of production could be the major benefit of offshoring. The author argues Munjal, Requejo
and Kundu, (2018), that an organisation can get tax advantage by offshoring the business
activities. As per the perception of Carmel, (2019), offshoring helps in financial saving. The
author also states that offshoring aid business entity in lowering or minimising the financial risk.
Risk involved in outsourcing and offshoring within businesses.
According to the thinking of Lioliou and Willcocks, (2019), loss of control is the major
risk associated with international outsourcing. The author Fountain and Langar,(2018), argues
that reliability and security are the biggest risk associated with outsourcing business activity to
internal companies. As per the opinion of Kaur, Singh and Majumdar (2018), Lack of an
effective as well as adequate communication can lead to the project failure which can have

negative effect on firm performance. The author Pla-Barber, Linares and Ghauri, (2018) argues
that Any arrangement with suppliers has elements of risk involved with it; however, risks
associated with sourcing internationally are often higher. According to the perception of Caratti,
Pinto, Scull and Perrin, (2018), increase in transaction cost can be the major risk associated with
offshoring of business activities. As per the research conducted by author Fountain and Langar,
(2018), breach of the security is the major threat associated with outsourcing business activities
to global companies.
Effective recommendations for entering into global market
According to the view of Johansson and Olhager, (2018), an organisation instead of
offshoring the business activity can enter into the joint venture with global company , as this is
the best and less risky strategy foe marking international presence. The author Koch and
Jørgensen, (2018) argues that an organisation can form strategic alliance with global companies
as this will help them in gaining the competitive advantage in the international market. This
strategy will also aid firm in reducing the risk of business failure.
Research Methodology
Research Methodology is basically strategies, approaches and philosophies used by
research for conducting the investigation process. It is very much essential for scholar to select
an appropriate research methodology, as this factor has direct as well as significant influence on
the outcomes. The different research methods used by the investigator in present study are :
Research type: The choice of research to be conducted is totally dependent on the nature of the
study. Qualitative and quantitative are basically two types of research which are generally
executed by scholar (Srinivas and Babu, 2017). Qualitative research is generally used for
collecting the facts related to the topic. Quantitative research involves gathering of numerical
data related to the topic. In present study, considering the nature of subject matter, researcher has
conducted qualitative research. Investigator has chosen to conduct qualitative research as it
assists in collecting the detail information related to the topic of investigation.
Research philosophy: It is basically a view of different people about the various techniques
which can be utilized for accumulation, analysis and interpretation of information. Research
philosophy assist researcher in identifying the methods which can be used for conducting the

study in systematic manner. The two most popular Research philosophy are positivism as well as
interpretivism. Investigator in present study has used interpretivism research philosophy in
present research. interpretivism research philosophy is most appropriate for conducting study on
specific topic as it allows researcher to utilize theories in effective manner for developing the
understanding about the benefits as well as risk of outsourcing and offshoring in context of
globalization.
Research design : It is basically a strategy used by the investigator during the investigation for
integrating the different components of the study. The most commonly used research design are
exploratory, experimental, descriptive and explanatory (Walsham, 2018). Scholar has chosen
descriptive research design for the present study. The reason for choosing the descriptive
research is that it enables investigator to gain depth knowledge about the study.
Research approach: It is a plan which is based on the assumptions related to the different tasks
that will be performed during the investigation procedure. Choice of the research approach is
completely based on the nature of problem identified during the research. Inductive and
deductive are two most commonly used research approach (Clarke, 2018). In context of present
investigation procedure, considering the nature of the problem found during the investigation,
researcher has used inductive research approach. Reason for selecting the inductive research
approach is that it provides investigator an ease in finding the answer to questions. It also assists
scholar in finding an appropriate solution to the specific issue.
Sampling : this research activity involves using the specific technique selecting the few people
from wide population as a participant in the research. Sampling activity has been conducted by
the participants considering the limitation of resources and time (Flick, 2018). The few sampling
techniques are random sampling , cluster, stratified, systematic etc. In context of the present
study, researcher has selected 20 people that is manager working in marks and Spencer as
participants in the research. Investigator has selected manager purposely, as scholar perceives
that they are people who have power to make important business decisions and they are
stakeholders those who can provide detailed information about the benefits as well as risk
associated with offshoring and outsourcing.
Data collection : It is considered to be as crucial task in research. Primary and secondary are the
two sources from where the information related to the topic can be gathered. Investigator has
used both the sources for accumulating the facts related to the subject matter. Selecting to gather

data related to the topic from both the sources is considered to be as the best decisions as it helps
researcher in gathering huge amount of information (Quinlan, Babin, Carr and Griffin, 2019).
Researcher will use questionnaire technique for collecting the facts related to the topic. This
specific technique has been chosen in order to provide participants an ease in giving the answers.
Questionnaire technique is less costly as compare to other methods. In addition to this, scholar
has used the books, magazines, online articles etc. for gathering the information related to the
topic.
Data analysis: This research activity is mainly concerned with refining of the information in
order to make its useful and understandable by user. Data analysis assist scholar in reaching to
the conclusion and assists them in making suitable decisions (Bell, Bryman and Harley, 2018).
Thematic analysis is the most commonly and popular techniques which are used by researcher
for analyzing the fact . In context of present study, investigator has design the different themes
based on the questions and answers provided by participants. In addition to this, scholar have
used graph and charts for presenting the information in professional manner.
Data analysis and interpretation
Theme 1 : International outsourcing is the strategy presently utilized by marks and
Spencer for marking global presence.
Ques 1. Which strategy is presently utilized by marks and Spencer
for marking international presence?
Frequency
 International Outsourcing 10
 Offshoring 6
 Both 4

Interpretation: It has been analysed from the information present in the table that out of 20
people, 10 have stated that international outsourcing strategy has been presently adopted by
marks and Spencer for marking international presence. These people have given this answer as
they were involved in the development of strategy. There are 6 participants out of twenty those
who have stated that offshoring is the strategy that has been implemented by organisation. They
have provided such response because these people does not have much knowledge about the
business strategy of firm.
Theme 2: yes, Marks and Spencer offshore or outsource business activities
Ques 2 . Does Marks and Spencer offshore or outsource business
activities ?
Frequency
International Outsourcing Offshoring Both
0
1
2
3
4
5
6
7
8
9
10
Frequency

 Yes 15
 No 3
 Don't know 2
Interpretation : From above diagram, it has been interpreted that out of 20, 15 participants has
answered that yes an organisation has outsourced as well as offshore some non-core activities.
Three out twenty people have stated that no marks and Spencer does not offshore or outsource
their business activities. Only two people denied giving the answer s they are not aware about
the concept of offshoring and outsourcing.
Theme 3 : IT business functions are outsourced or offshore by marks and Spencer .
Ques 3. Which business functions are outsourced or offshore by
marks and Spencer?
Frequency
Yes No Don't know
0
2
4
6
8
10
12
14
16
Frequency

 Human resource 6
 Marketing 5
Software development 9
Interpretation : It has been analysed from the information present in the table that 9 out of 20
respondents have stated that software development is the activity which is outsourced by marks
and Spencer. There are six people those who have replied that human resource activity is
outsourced by marks and Spencer. They have given such response based on the improvement or
change ion recruitment practices.
Theme 4: Costs saving, is the main benefit of offshoring and international outsourcing of
business functions.
Human resource Marketing IT
0
1
2
3
4
5
6
7
8
9
Frequency

Ques 4. What is the main benefit of offshoring and international
outsourcing of business functions ?
Frequency
 Cost saving 12
 Access to skilled workforce 2
 Increase in efficiency 6
Interpretation : From the above diagram , it has been interpreted that twelve out of twenty people
perceives that costs saving is the benefit of offshoring as well as international outsourcing. They
have given such answer because they perceive that company have to pay low wages to workers
belonging to other nation in order to get work done. There are six people who has answered that
increasing in the working efficiency is the major benefit of outpouring and offshoring. Those
people have given such reply as they think that by outsourcing the activity management can
concentrate on core task.
Cost saving
Access to skilled workforce
Increase in efficiency
0
2
4
6
8
10
12
Frequency

Theme 5: Loss of control, is the biggest risk associated with international outsourcing.
Ques 5. Which is the biggest risk associated with international
outsourcing ?
Frequency
 Loss of control 13
 Loss of reputation 5
 Loss of innovation 2
Interpretation : It has been analysed from the information present in the table that 13 out of 20
people perceives that Loss of control is the biggest risk associated with outsourcing of business
functions. There are 5 participants out of twenty who have stated that loss of reputation is the
Loss of control Loss of reputation Loss of innovation
0
2
4
6
8
10
12
14
Frequency