Campus Currents

To Outsource or Not to Outsource Kholekile Gwebu asks the question, and looks for an answer By David Brooks

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When you grow up in Zimbabwe, move to Botswana and attend college in Lesotho, it seems pretty clear that this will color your view of the weather in Durham. And so it is with Kholekile Gwebu, assistant professor of decision sciences—but not, perhaps, in the way you'd expect. "It's nice," he says. "It's sunny."

Sunny—Durham? Compared to Botswana, home of the Kalihari Desert? No, Gwebu admits, maybe not. But compared to Kent, Ohio, definitely.

Gwebu came to the Whittemore School of Business and Economics two years ago after getting his master's and doctorate at Kent State. Gwebu had received his bachelor's degree in accounting in Lesotho; at Kent State he indulged his geekier side and got degrees in management and information systems. He came to UNH after hearing of the school's reputation at various conferences.

UNH was glad to have him. Gwebu's work covers technical fields like e-commerce and multi-agent computer simulations, but it also involves more general business areas, such as outsourcing. Consider a 2008 paper that he co-wrote with several fellow researchers that asked a simple-sounding question: Does corporate outsourcing of information technology actually work?

The quartet tackled this question by examining financial statements from large, publicly traded companies, giving a more objective element to analyses that had previously been based on surveys. Using tools like Porter's value-chain model, which helps firms analyze the advantages of specific activities, the team concluded that while IT outsourcing rarely shows benefits at the "firm level"—it doesn't boost the stock price—it can help at the "process level" of sales, administrative expenses, depreciation and the like.

Perhaps more importantly for future research, they also nailed down what sounds like an obvious conclusion: Before a company can take advantage of IT outsourcing, it needs to understand the work they want outsourced so they can judge the vendors they hire. In reality, Gwebu says, many firms take the opposite route, outsourcing functions they don't understand.

That paper, written for the Journal of Information Systems, has led Gwebu and colleagues to start pondering how companies can apply these lessons to make outsourcing work better. "We are looking for vendor-selection strategies, examining companies that seem to have done well. Is there anything in common for the way that they select vendors?" he asks. "We would like to have prescriptions for companies, even those without high IT capabilities, on how you choose vendors."

Incidentally, IT outsourcing usually means hiring experts here in the United States, not overseas. "The risk with IT sourcing abroad is very high. You might send some coding abroad, but not data management," Gwebu says. That might sound odd from a man whose first three decades of life were spent crossing national borders, oceans and the equator—but then again, he's a guy who admires Durham for its sunshine.