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 researchers 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 selfexplanatory 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 havent 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 firms

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 companys 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 leaders 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 Visers 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. Nonquantifiable 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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