Abstract
There is an agreement in the literature that an effective business model is a competitive weapon for multinationals. We extend this strategic framework to the offshoring arena by analyzing a change in the business model as a means for coping with the inefficiency trap and reducing complexity management. Most companies start by offshoring simpler tasks and achieve great savings. But, as they become more involved in offshoring, complexity increases and savings decrease. We analyze this by studying two Spanish banks, BBVA and Banco Santander. Findings suggest that the reason and the limit to complexity can be found in the need to change the business model. Results may stimulate future research in other industries and companies from other countries.
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Notes
- 1.
The same authors talk about another concept: tactics. This refers to the residual choices that are open to a firm by virtue of the business model it chooses to employ and are crucial in determining the firm’s value creation and capture (Casadesus-Masanell and Ricart 2010).
- 2.
In fact, 10 % of the processes stayed in Madrid and 20 % finally moved near shore to Malaga.
- 3.
For the case of the Spanish business unit, IBM is responsible for 90 % of the processes, which are performed in Buenos Aires and Mexico DF, while Indra and Everis manage the other 10 %, from a center in Lima.
- 4.
In the case of an internal governance mode, the firm owns the foreign entity. In the case of an external governance mode, the firm outsources its activities to a local service provider (Hutzschenreuter et al. 2011).
- 5.
And other smaller units not included in this document.
- 6.
In fact, the actual deployment is not finished yet, but the ultimate objective is the common platform as explained in the text. The same is true for the other layers of the system.
- 7.
Isban has three global centers in Spain, Brazil and Chile. Produban operates globally from its centers in Spain, Mexico, UK and Brazil. And finally, Geoban provides its back-office activities from centers located in Spain, Portugal, Poland, Mexico, UK, Germany, USA and Argentina.
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Acknowledgments
The author acknowledges the support of the Spanish Ministry of Science and Innovation (ref. ECO2009-06540-E, ECO2010-18816, ECO2011-13433-E).
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Paz-Aparicio, C., Ricart, J.E. (2013). Offshoring Activities Impact a Company’s Business Model: The Case of BBVA and Banco Santander. In: Pedersen, T., Bals, L., Ørberg Jensen, P., Larsen, M. (eds) The Offshoring Challenge. Springer, London. https://doi.org/10.1007/978-1-4471-4908-8_2
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DOI: https://doi.org/10.1007/978-1-4471-4908-8_2
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