The Business Outsourcing in Telecommunication Industry Case of Pakistan

R.R. Ahmed, J. Vveinhardt, N.
Ahmad,
M. Mirza
760
ISSN 1648 - 4460
Implementation of IT and Innovations: Implications for Business

---------TRANSFORMATIONS IN --------
Ahmed, R.R., Vveinhardt, J., Ahmad, N., Mirza, M. (2014), The

Business Outsourcing in Telecommunication Industry: Case of
Pakistan, Transformations in Business & Economics, Vol. 13, No 2B
(32B), pp.760-779.
BUSINESS & ECONOMICS

Vilnius University, 2002-2014
Brno University of Technology, 2002-2014
University of Latvia, 2002-2014
THE BUSINESS OUTSOURCING IN

TELECOMMUNICATION INDUSTRY: CASE OF PAKISTAN
1Rizwan
Raheem Ahmed
Department of Business
Administration & Commerce
Indus University
Block-17, Gulshan, Karachi
Pakistan
Tel.: +92 300 8293560
E-mail: rizwanraheemahmed@gmail.com
4Mirza Mujeeb
Indus University
Pakistan
Tel.: +92 322 2001723
E-mail: mujeebmirza@hotmail.com
2Jolita
Vveinhardt
Institute of Sport Science and

Innovations
Lithuanian Sports University
Sporto str. 6, Kaunas
Lithuania
Tel.: +370 698 06668
E-mail: jolitaw@gmail.com
3Nawaz
Ahmad
Indus University
Pakistan
Tel.: +92 300 9292422
E-mail: nawaz@indus.edu.pk
Rizwan Raheem Ahmed, PhD, Professor, Institute of Business

Administration & Commerce, Indus University (Pakistan), carries more
than 19 years of Professional Experience at Senior Management Positions
in Sales and Marketing with prestigious National & Multinational
Organizations in Pharmaceutical Industry. He has been working at Indus
University since September 2013 as Professor for Business Administration
& Commerce department. He has been visiting Faculty for SZABIST for
several years. He has published more than 50 publications (Peer reviewed
research articles) in reputable national and international journals including
ISI Thomson Reuters indexed and impact factor Journals as well. He is
also an author of two books and several news articles.
2
Jolita Vveinhardt, PhD, Chief Researcher, Institute of Sport Science and

Innovations of Lithuanian Sports University (Lithuania), Associated
Professor at the Department of Management of the Faculty of Economics
and Management at Vytautas Magnus University (Lithuania). She is the
head of the research group The state of the climate in leisure industry
organisations and human resource management research. She has been
exploring the phenomena of mobbing and nepotism, climate of the
organisation and other aspects related to human resource management for
recent several years. As author and co-author she has published more than
100 scientific publications in Lithuanian and foreign journals on the topics
of economics and management of organisations. Vveinhardt is the author
and co-author of five books. The main areas of her research interest are
as follows: mobbing in employee relations, climate of the organisation,

nepotism as a management anomaly, favouritism, cronyism,
protectionism, values congruence, human resource management and
corporate social responsibility.
TRANSFORMATIONS IN BUSINESS & ECONOMICS, Vol. 13, No 2B (32B), 2014
R.R. Ahmed, J. Vveinhardt, N. Ahmad,

M. Mirza
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3
Nawaz Ahmad, M. Phil., Assistant Professor and Head of Research

& Publications, Department of Business Administration & Commerce,
Indus University, Pakistan, has the experience of teaching profession
for 15 years. He has taught various subjects such as Research Methods,
Islamic Finance, Corporate Finance, Financial Management, Financial
& Managerial Accounting, Econometrics, Time Series, Economics,
etc. Moreover, he is the Editor of IJMS (Indus Journal of Management
Sciences) as well. Thus, being associated with research, he has
published 30 research articles in national and international journals and
17 conference proceedings in the field of Management Sciences and
Economics.
4Mr.
Mujeeb Mirza, MS, is a Professional Telecommunication

Engineer working for Multinational Telecommunication organization,
the Warid Telecomm Pakistan for the last 15 years. He has overall 20
years practical experience in Telecommunication industry in Pakistan
and abroad. He was a part of the team involved in the implementation
of 3G & 4G technologies in Warid Telecom. He has recently
completed his MS, MBA at Indus University. He is the author and a
co-author of several articles in national and international journals. His
areas of expertise are Telecommunication, Outsourcing, Business
Modelling and Re-engineering.
Received: September, 2014
1st Revision: September, 2014
2nd Revision: October, 2014
Accepted: October, 2014
ABSTRACT.
The global trend of outsourcing in telecommunication

industry demonstrates the reduction in overall costs and a need to be
more competitive in the international market. This paper analyzes the
outsourcing phenomenon and its impact on the cost of doing business in
telecommunication business in Pakistan. In this regard different reasons
have been examined as correlation and multiple linear regression
methodology has been applied to check how the reasons correlate. In
this regard the SPSS software has been used to analyze the dataset and
to come to methodology-based conclusions. Statistical quantitative tool
like correlation and multiple linear regressions were used in this paper.
The results of the findings reveal that some of the reasons are strongly
positively correlated or negatively correlated if they include negative
characteristics as business risk and disadvantages. The Multiple linear
regressions show that the only two reasons critical drivers and benefits
met by outsourcing in telecommunication (BMOT) are statistically
significant. They relate to cost reduction of day-to-day operation,
optimization of capital expenditures, heading of count control,
flexibility, and access to new technology. They also acquire new
capabilities, complement existing know-how, reallocate and focus on
resources and have a positive impact on telecommunication businesses
in Pakistan.
KEYWORDS:
telecommunication industry, business outsourcing,

critical drivers, correlation, multiple linear regressions.
JEL classification: C12, L96, M55.

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Introduction
Relevance of the research. Recently broad opportunities opened to companies
operating on a global scale especially/particularly in the spheres of telecommunications,
transport, information systems and connections, etc. The trends of global telecommunications
industry show an orientation towards reduction of costs as well as an increasing need for
being more competitive on an international market. Competitive advantages related to
inventions, innovation and globalization growth have resulted in possibilities for the rise of
doing business. This is of relevance both to countries that are economically well developed
and to developing countries, paying attention to the fact that the trends of outsourcing in
telecommunication businesses have not been widely analyzed.
Therefore, keeping this objective in view, the undertaken study is an imperative and
essential in order to find out the impact of outsourcing in Telecommunication businesses in
Pakistan.
According to D.C. Fernndez and A.S. Valencia (2013, p.14), the subcontracting and
delocalization of productive activities that characterize the global capitalist economy are
attempts to reduce costs and exempt corporations from their responsibilities to labour by
delegating production to other companies, regions, and countries and even to the workers
themselves. According to J. De Bandt (1996), the companys decision on outsourcing is
usually examined as a make or buy problem. On the one hand, market blemishes statistic
problems, complications to management, the cooperation between customers and the
company and a decrease in management over how certain solutions are offered and improved.
On the other hand, complexity in arms-length, agreements may in turn increase visibility of
the business liability (see study by I.A. Irefin, O.I. Olateju and G.O. Hammed, 2012).
The research conducted by N.N. Ghikas (2012) argues that outsourcing is a rapidly
growing phase of economy of the world with a universal expenditure of about US $ 3.7
trillion in 2001. Business Process Outsourcing (BPO) has been proposed as one of the largest
parts of expansion in the outsourcing market. Yet, many business organizations are still
reluctant to outsource business processes that are part of their core business.
The research done on outsourcing in Australia revealed that with respect to
organisational determinants, larger organisations were more likely to use consultants; sector
differences revealed higher recruitment and selection and performance-related pay
outsourcing in the private sector, higher HRIS outsourcing in the public sector, and a focus on
employee relations in the not-for-profit sector. There are no differences in the qualifications of
HRM professionals and consultants but consultants are more likely to have broader business
experiences (Sheehan, 2009, p.236). According to H. Grg, A. Hanley (2004) by taking the
data of electronics sector of the Republic of Ireland the empirical relationship between
outsourcing and profitability at the level of machinery and plant is examined. The authors
have deduced that the profit and outsourcing relationship consists of the properties of the plant
and particularly depends upon its size. It is worth mentioning that it has been found out that if
the plant size is larger than the average then the benefits of material input can be achieved but
not if machinery and plant are small.
The insights by researchers B. Russell, M. Thite (2008), D. Grimshaw, M. Miozzo
(2009), A. Wong et al., (2010) are of major importance in different countries and relevant to
the context of this presented research. The authors found out that outsourcing goes hand in
hand with work simplification and can be useful over and above the benefits of increased
efficiency; also the market for IT services depends on outsourcing. Thus, outsourcing

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becomes one of the strategic directions of doing business based on knowledge and
technologies.
However, business outsourcing is not assessed unambiguously. Frequently,
outsourcing strategies are viewed negatively by the service receivers because of the fear of
losing control over the process. It takes time to build trust in a partnership. Therefore, initial
trust would be a qualitative attribute that managers should look for in their selection of
vendors for outsourcing (Abdul-Halim et al., 2014, p.11). Moreover, organizations meet new
challenges: New tensions and conflicts are the hallmarks of a network-based approach to
HRM, and these are multiplied under certain sectoral and institutional conditions (Grimshaw,
Miozzo, 2009, p.1546).
The research done in Pakistan revealed that core competencies, together with
outsourcing practices, were found to vary according to the size of the manufacturing firm
(Rana, Ghani, 2004, p.7). It has to be admitted, however, that more comprehensive research
on outsourcing, in the field of telecommunication of this country in particular, has not been
adequate which partly limits the business and cooperation development in both domestic and
international market.
Problem of the research: is the questions what is a currently prevailing outsourcing
phenomenon along with its impact on the cost of doing business in the telecommunication
industry of Pakistan and how should the business opportunities be developed in order to
improve the results of the organizations performance without the risk of unwanted and
maintaining a high level of client satisfaction.
Level of problem exploration: business outsourcing is a broadly analysed area
examined in different sectors of the economy, but there are still some sectors in which
reluctance has been observed while considering outsourcing phenomena. One of these sectors
has been identified as telecommunication industry in Pakistan.
The business outsourcing was researched in various aspects and to illustrate the variety
a brief overview of the research topics is presented further. R.S. Gastons (2005) article draws
on the experiences gained by the investment banking industry in outsourcing to describe the
process of outsourcing and off shoring business information research and assesses the
advantages and drawbacks of the process with particular reference to continuing concerns
about confidentiality, quality of work, and the need to maintain good relationships between
researchers and end users (p.263). Moreover, R. Wongsaroj et al., (2014) maintain that
information technology outsourcing (further ITO) studies have been the focus of researchers
for decades. The authors ascertain that in Thailand, the National Electronics and Computer
Technology Centre (NECTEC) reported that the financial and banking industry has the
highest spending on computer services primarily by outsourcing the core banking and service
management system. The authors note that nonetheless, research on ITO in Thailands
financial industry has been limited. This study was among the first to empirically investigate
the relationship between the levels of ITO, defined as the percentage of IT activities and
components selected to be outsourced, and ITO success, defined by the benefits received from
outsourcing in Thailand (p.256).
A major attention is paid to the comparison of the conditions and international
business relations in different countries. Grimshaw, Miozzos (2006), article examines the
institutional effects on a fast-growing area of knowledge-intensive business services
Information Technology (further IT) outsourcing. The article presents the analysis of
industry level data shows that the diverse institutional contexts of Germany and the UK
provided an equally favourable basis for growth in the IT outsourcing market, despite its

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apparent deregulatory bias (p.1229). W.R. Poster (2013) analyzes hidden sides of the credit
economy focusing on Indian call centres, where Indian employees provide customer service
for US consumers, while S. Agrawal et al. (2010) notify that this has become popular in India
after the economic liberalization process.
The research shows that the popularity of outsourcing is relevant to social and value
changes in the society (de Ruijter, 2004), equal opportunities (Windebank, 2007) and may
cause a problem of work relationships. V. Doellgasts (2008) article compares the process
and outcomes of collective negotiations over the outsourcing of call centre jobs in US and
German telecommunications firms. The author states that variation in access to resources
between countries helps explain differences in the unions ability to negotiate strong
collective agreements on outsourcing and to influence restructuring decisions (p.265).
The other article by the mentioned authors, namely, Grimshaw, Miozzos (2009)
contributes to such an approach by interrogating the human resource practices that have
evolved to manage the transfer of IT workers accompanying large-scale outsourcing
contracts (p.1522). Moreover, Lockwood (2012) argued that the unfortunate combination
may be resulting in unreasonable language assessment gatekeeping to BPO industry
employment and that the problems being experienced by the BPO industry to recruit enough
good speakers of English may reside more in their own practices than in the levels of English
of their graduate applicants (p.108).
It is important that is has been identified that outsourcing is relevant and effective in a
different size (Klaas et al., 2005; Belso-Martnez, 2010) and is applied in different forms in
organizations. For example, A. Wong et al., (2010) research results show that from 95
largely domestic outsourcing partnerships in China support the hypotheses that cooperative,
but not competitive or independent goals are the foundation upon which partners share their
effective practices openly and directly with each other and that this kind of discussion
promotes improved business results. Specifically, the structural equation analysis supported
the reasoning that cooperative goals foster open discussion of effective practices that, in turn,
results in business development (p.1563). E. Memili et al., (2011) propose that transaction
costs arising from human asset specificity, threats of opportunism, and risk aversion will
make small- and medium-sized family firms operating with technologies of low to medium
complexity less likely to outsource than comparable nonfamily firms (p.47).
Outsourcing is analyzed in different studies both in private and public sector. Ward
(2007) maintains that advocates of new public management (NPM) claim that private service
delivery promotes efficiency, effectiveness, and cost savings in government, although critics
of NPM cite numerous examples of failed attempts to apply NPM (p.627). J. Moon et al.,
(2014) study conducts an empirical investigation on IT outsourcing projects for e-government.
The authors maintain that framework is proposed and 13 IT outsourcing success factors from
the private sector are identified through a literature review. The framework demonstrates the
impact of four categories, organizational environment, contract/project characteristics, project
management and partnership management on IT outsourcing. A survey of IT managers
responsible for managing IT outsourcing projects in Korean government organizations was
conducted and 178 IT outsourcing projects for e-government initiated by 56 different
government organizations were analyzed (p.1). J. Moon et al., (2014) identified that they
were then compared with general beliefs on IT outsourcing in the private sector. Findings and
lessons of the empirical investigation of this study have provided useful guidelines for IT
managers in the public sector (p.1). The views on the problem are especially relevant to the

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countries where the state takes an active part in telecommunication business and the
effectiveness of management serves more criticism than praise.
Factors of Outsourcing: There are different factors for outsourcing of organizations.
Nine categories of factors due to which organizations delegate their performances were
analyzed. According to Hojnik (2010), these referred to improving income, decreasing
expenses, company growth, business factors, personal factors, the need of extreme
concentration on the main part of actions, the need to enhance management and decrease
threat, periodic specific achievements and too high start of financial commitment for
accomplishment of specific actions.
Every company regularly has to choose either it should bring out a company action
internally or pass this action to a vendor, which is considered as a decision of make-or-buy
choice.
When a business selects a vendor to perform a specific task, it has to be said that the
company outsources this particular action. Thus, the outsourcing becomes known as the
authority to some extent is given to the external company (Gilley, Rasheed, 2000).
According to B.B. Hojnik (2010), the reasons for outsourcing of companies, as it has
been argued by researchers, were high revenue, cost deduction, development of business and
personal reasons, while the main reason is to keep an eye on the necessity of highly focus on
the central part of activities. The major necessity is to get a better control and condense risk.
Only rarely there is a need for specific activities and huge initial investment for getting certain
activities.
According to I.A. Irefin et al., (2012), an outsourcing plan is at the centre of the
process of retaining business transformation towards the flexibility of the organization
structure. In this respect, these processes may be faced by extreme changes which relate to
procedure re-engineering.
In Peters opinion (2009), outsourcing is not a threat to economists of this nation but it
is an opportunity to raise American pay checks, productivity, and prosperity. It is an
opportunity that will be squandered, if the alarmists encourage people take boneheaded
solutions.
According to J. Papaioannou (2002), if the firms properly manage the outsourcing, the
efficiency of the operational functions can be increased with a tolerable risk and human
resource management. It has to be noted that two risks are considerable one is when district
offices engage in district contracts and the other is a threat of leaving the opportunity due to
the business re-engineering. On the other hand, the outsourcing has an ability to increase the
sales revenue as well as residual income. When the costs of production (internal and external)
are considered, the capacity enhancement advantage can be evaluated properly.
Object of the research: business outsourcing in telecommunication industry.
Aim of the research: to analyze the currently prevailing outsourcing phenomenon
along with its impact on the cost of businesses in the telecommunication industry of Pakistan,
and to analyze the business possibilities in order to improve the results of the organization
performance without risk of the unwanted and meeting a high level of client satisfaction.
To achieve the aim, the following tasks of the research are set:
1. to research on outsourcing domination in Pakistan telecommunication industry.
2. to analyze the outsourcing from the point of view of critical drivers having done the
study of the outsourcing existence.
3. to identify the impact of outsourcing on the cost of business outsourcing in Pakistan.
The investigation examines the following hypotheses:

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H1 = Critical Drivers have no impact on outsourcing
H2 = Core Activities have no impact on outsourcing
H3 = Benefits met by outsourcing in telecommunication industry have no impact on
outsourcing
H4 = Benefits desired by consumers have no positive impact of outsourcing
H5 = Disadvantages more as compare to advantages to the employment level have no
impact on outsourcing
H6 = Better result of strategic planning has no impact on outsourcing
H7 = Fulfilment of social, financial and ethical responsibilities has no impact on
outsourcing
H8 = Risks reduction related to outsourcing has no impact on outsourcing
Methods of the research: considering the nature of the study one could conclude that it
is quantitative and cross-sectional, as to achieving the purpose a closed-ended questionnaire
was prepared and filled in by 261 respondents who were the employees in the
telecommunication industry at management level. Further the respondents were selected on
the basis of convenience and purposive sampling.
2. Material and method
Research Questions. To check the empirical relationship between the outsourcing, the
key leverage and the reasons have positive or negative correlation and its effect on the
companys level by using multiple regression. Questionnaires were used as the research
instrument. They were distributed among 61 respondents, who were the staff of
telecommunication businesses. Descriptive statistics and Correlation and Multiple regression
tools of analysis were used (Hojnik, 2010).
According to H.S. Naru, T. Truitt (2013), correlation evaluates the scale of the factor
influence of the outsourcing on business. The hypothesis was examined by the vicariate linear
regression and multiple linear regression analysis to check the relationship of the criterion
with the predictor variables with outsourcing. The validity and accuracy of the research data
set were checked by the SPSS and the data primary collection method was adapted from the
previous successful research.
Measurement of reasons of outsourcing: Using the study of different literature the
groups of reasons have been divided into nine categories: Profit, Critical Drivers, Core
Activities, Benefits, Consumers Benefits and Disadvantages in telecommunication sector,
better results after outsourcing, Social, Financial and Ethical responsibilities and Reduction of
risk.
According to the different literature reviews, the following statements have been
considered:
The telecommunication businesses want to reduce different types of costs, such as
operating costs, costs of capital expenditure, labour costs and fixed costs (cost reasons).
The telecommunication businesses wish to generate more profit and capture new
markets (profit reasons).
The telecommunication businesses wish to acquire advanced technology, improve
new product, and develop the existing product and generate an idea (reasons of development).
The telecommunication businesses wish to resolve management problems, to better
head count control and better manage the flexibility (reasons of organization).

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The telecommunication businesses wish to watch their employees with adequate
and right knowledge, experience and skills (reasons of personnel).
The telecommunication businesses wish to handle better with operational activities
to minimize risk (reasons of risk management and control).
The telecommunication businesses wish to make the core activities more attentive
and focused (reason of focus).
The telecommunication businesses wish to avoid the high investment to implement
the specific activities initially (reason of investment).
The telecommunication businesses wish to keep an eye on the scope of rare
activities for the implementation (reason of rarely needed activities).
Survey Method. The questionnaire that has been developed to ask the questions taking
an interview from the personnel of the telecommunication was used. In this regard the primary
data is collected.
Populations and Sampling. The questionnaire has been developed and targeted on the
officials who are related with telecommunication business and have an experience to answer
the mentioned questions with options under the Likert Scaling. It has been successfully
approached by 261 telecommunications officials from different companies for taking samples
to test the results.
Data Analysis.
Package. Previous researches have tested business outsourcing by using Statistical
Package of Social Sciences. This present research has also used the same software for the
different techniques as examined by the previous researchers for making sound decision.
Technique. According to K.M. Gilley, A. Rasheed (2000), the businesses want to
watch the positive effect on the outsourcing, but there may also be some negative effect of the
outsourcing.
This research will also assess the relationship of the financial and non-financial
reasons that will measure the success of the telecommunication businesses in Pakistan. The
data on financial and non-financial effect have been collected via questionnaire.
According to H. S. Naru, T. Truitt (2013), the scale of the factor influence of the
outsourcing on the business was evaluated by the correlation. The hypothesis was examined
by the bivariate linear regression and multiple linear regression analysis to check the
relationship of the criterion with the predictor variables with outsourcing. The validity and
accuracy of the research data set were checked by the SPSS and the data primary collection
method was adapted from previous successful research.
A statistical technique that uses several explanatory variables is used to predict the
outcome of a response variable. The goal of multiple linear regression (MLR) is to model the
relationship between the explanatory and response variables. There are several types of MLR,
included in Table 1.

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Table 1. Multiple linear regression: type and characteristics
Type
Direct (or
Standard)
Hierarchical
Characteristics
All IVs are entered simultaneously
IVs are entered in steps, i.e., some before others

Interpret: R2 change, F change
The software enters IVs one by one until there are no more significant IVs to be
Forward
entered
Backward regression enables the researcher to develop a model including the
Backward
entire significant variable, by removing the insignificant ones.
A combination of Forward and Backward MLR
Stepwise
Source: adapted to D. Gujarati, 2006.
Multiple linear regression models: the model for MLR, given n observations, is:
Y = B0 + B1x1 + B2x2 + ... + Bpxp + Ei
where i = 1,2,.......n
Under this research:
Y=0+ 1X1+ 2X2+ 3X3++ 4X4+ 5X5+ 6X6+ 7X7+ 8X8+E (Residual)
Y= Outsourcing is key leverage for telecommunication business
X1= Critical Drivers
X2= Core Activities
X3= Benefits met by outsourcing in telecommunication
X4= Benefits desired by consumers
X5= Disadvantages more as compare to advantages to the employment level
X6= Getting better result by strategic planning
X7= Social, Financial and Ethical responsibilities fulfilment
X8= Risks reduction related to outsourcing
Y = 0 + 1 critical drivers + 2 core activities + 3 outsourcing benefits + 4
consumer benefits + 5 employment disadvantage + 6 strategic planning + 7
responsibilities + 8 risks + E
E = Residual (A residual is the difference between the actual value of a DV and its predicted
value)
3. Results and Discussion
The results of regression analysis are presented below. The summary of the model
represents R and R square with respect to dependent and independent variables. Table 2
defines how much independent variables explain dependent variable.

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Table 2. Model summary: Dependent & Independent Variables
Model
R Square
Adjusted R
Std. Error of the

Estimate
0.688a
0.474
0.393
0.809
Source: created by authors.
The analysis of variance (ANOVAs) represents the model taking the selected variable
(Table 3).
Table 3. ANOVAs (Dependent Variables & Predictors)
Sum of
Squares
30.594
33.996
64.590
Model
Regression
Residual
Total
Df
8
52
60
Mean
Square
3.824
0.654
Sig.
5.850
0.000b
a. Dependent Variable: Outsourcing is Leverage.

b. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER,
Disadvantages are more than Advantages at Employment Level, Critical Drivers, core activities, Unfavourable Activities, Desires.
In Table 3, the probability value of F-statistics (F = 5.850 P = 0.000) is less than 0.005
then the F value is statistically significant and the predictors are jointly significant for they
explain Y significantly.
The coefficients represent that the model applying selected variables is either
statistically significant or not in the multiple linear regression (Table 4).
Table 4. Coefficients: Significance of Selected Variables
Model
(Constant)
Critical Drivers
Core activities
BMOT
SFER
Desires
Unfavourable Activities
Disadvantages
Outnumber Advantages
at Employment Level
Gain Better Results
Using Strategic
Framework for Planning
and Managing IT
Outsourcing
Unstandardized
B
5.074
1.054
-0.132
-0.934
-0.258
-0.163
0.007
Coefficients
Std. Error
2.296
0.184
0.227
0.349
0.304
0.275
0.049
Standardized
Coefficients
Sig
0.649
-0.064
-0.279
-0.090
-0.068
0.015
5.729
-0.583
-2.673
-0.847
-0.593
0.134
0.000
0.563
0.010
0.401
0.556
0.894
0.054
0.101
0.063
0.534
0.596
-0.143
0.103
-0.151
-1.394
0.169
a. Dependent Variable: Outsourcing is Leverage.
The coefficients in Table 4, showing that only one independent variable Critical
Drivers and BMOT have a significant impact on the outsourcing since their prob value < 0.05.

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Therefore, the null hypothesis that there is no impact of critical drivers and BMOT was
rejected as the above given tables show that if critical drivers increase by 1 unit, the critical
driver increases by 1.054 and has a positive impact, BMOT has a negative impact, when it
increases by 1 unit, the BMOT decreases by 0.934. The prob values of other variables are >
0.05 and not significant, therefore the null hypothesis was not rejected. Therefore, it could be
concluded that the 7th model is significant which shows that only BMOT & Critical Drivers
have an impact on outsourcing.
Table 5 summarizes the results of correlation analysis between the reasons for
outsourcing and selected financial and non-financial indicators of company performance.
Table 5. Correlation Analysis: Outsourcing & Selected Indicators
1
2
3
4
5
6
7
8
Indicators
Outsourcing is
Leverage
Critical Drivers
Core activities
BMOT
Desires
SFER
Unfavourable
Activities
Disadvantages
Outnumber
Advantages at
Employment Level
Gain Better Results
Using Strategic
Framework for
Planning and
Managing IT
Outsourcing
0.571**
0.016
-0.269*
-0.234**
-0.100
-0.096*
----0.180
0.075**
-0.100
0.037
-0.310*
----0.039
-0.012
-0.178
0.013
0.000
-0.248**
-0.037**
0.189
-----0.203
0.137
-0.052
----0.210
-0.153
------0.115
-----
-0.267
-0.177*
-0.352
-0.015
0.209
----
0.177
-0.009
0.010
-0.067
-0.279*
-0.015
------
------
** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).
In Table 5, in order to determine the association between outsourcing, critical drivers,

core activities, BMOT, desires, SFER, unfavourable activities, disadvantages which
outnumber advantages at employment level and gain better results using strategic framework
for planning and managing IT outsourcing, the Pearson correlation was applied. The above
given tables show that the critical driver and BMOT prob values are <0.05. Therefore, the null
hypothesis that there is no correlation was rejected and it could be concluded that the
significant correlation is between the outsourcing and critical drivers along with outsourcing
and BMOT. There is no significant correlation of outsourcing with the variables where the
prob value > 0.05. Therefore, the null hypothesis that there is no correlation cannot be
rejected. Table 6 represents the backward multiple linear regressions.

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Table 6. Model summary: Backward Multiple Linear Regression
Model
1
2
3
4
5
6
7
R
0.688a
0.688b
0.686c
0.682d
0.678e
0.669f
0.651g
R Square
0.474
0.473
0.470
0.465
0.460
0.448
0.424
Adjusted R Square
0.393
0.404
0.412
0.416
0.421
0.419
0.404
Std. Error of the Estimate

0.809
0.801
0.796
0.793
0.789
0.791
0.801
a. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER,
Disadvantages Outnumber Advantages at Employment Level, Critical Drivers, core activities, Unfavourable Activities, Desires; b.
Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER,
Disadvantages Outnumber Advantages at Employment Level, Critical Drivers, core activities, Desires; c. Predictors: (Constant), Gain Better
Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER, Critical Drivers, core activities, Desires; d.
Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER, Critical
Drivers, Desires; e. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing,
BMOT, Critical Drivers, Desires; f. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT
Outsourcing, BMOT, Critical Drivers; g. Predictors: (Constant), BMOT, Critical Drivers.
In the backward multiple linear regression, the analysis of variance (ANOVA)

represents that the model with the selected variable is best fit or not (Table 7).
Table 7. ANOVAa : Backward Multiple Linear Regression
Model
1
Sum of Squares
Regression
Residual
Total
Regression
Residual
Total
Regression
Residual
Total
Regression
Residual
Total
Regression
Residual
Total
Regression
Residual
Total
Regression
Residual
Total
Df
8
52
60
7
53
60
6
54
60
5
55
60
4
56
60
3
57
60
2
58
60
Mean Square
3.824
0.654
F
5.850
Sig.
0.000b
4.369
0.642
6.809
0.000c
5.063
0.634
7.993
0.000d
6.007
0.628
9.560
0.000e
7.426
0.623
11.921
0.000f
9.648
0.625
15.427
0.000g
13.698
0.641
21.361
0.000h
a. Dependent Variable: Outsourcing is Leverage; b. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and
Managing IT Outsourcing, BMOT, SFER, Disadvantages Outnumber Advantages at Employment Level, Critical Drivers, core activities,
Unfavourable Activities, Desires; c. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT
Outsourcing, BMOT, SFER, Disadvantages Outnumber Advantages at Employment Level, Critical Drivers, core activities, Desires; d.
Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT Outsourcing, BMOT, SFER, Critical
Drivers, core activities, Desires; e. Predictors: (Constant), Gain Better Results Using Strategic Framework for Planning and Managing IT
Outsourcing, BMOT, SFER, Critical Drivers, Desires; f. Predictors: (Constant), Gain Better Results Using Strategic Framework for
Planning and Managing IT Outsourcing, BMOT, Critical Drivers, Desires; g. Predictors: (Constant), Gain Better Results Using Strategic
Framework for Planning and Managing IT Outsourcing, BMOT, Critical Drivers
h. Predictors: (Constant), BMOT, Critical Drivers.

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In Table 7, after applying backward multiple linear regression, each variable has been
tested fit or not the outsourcing the best. The above given table shows that each variable Fstatistics > 2 and the prob value are less than 0.05, therefore the F-stats and Prob value are
statistically significant and the predictors also separately explain Y significantly.
The Coefficients represent the model by the selected variables that are statistically
significant or not in the backward multiple linear regression (Table 8).
Table 8. Coefficientsa : a. Backward Multiple Linear Regression
Model
(Constant)
Critical Drivers
Core activities
BMOT
Desires
SFER
Unfavourable Activities
Disadvantages
Outnumber
Advantages at Employment
Level
Gain Better Results Using
Strategic Framework for
Planning and Managing IT
Outsourcing
(Constant)
Critical Drivers
Core activities
BMOT
Desires
SFER
Disadvantages
Outnumber
Advantages at Employment
Level
Outsourcing
(Constant)
Critical Drivers
Core activities
BMOT
Desires
Unstandardized Coefficients
Standardized
Coefficients
Beta
Sig.
0.649
-0.064
-0.279
-0.068
-0.090
0.015
2.209
5.729
-0.583
-2.673
-0.593
-0.847
0.134
0.032
0.000
0.563
0.010
0.556
0.401
0.894
B
5.074
1.054
-0.132
-0.934
-0.163
-0.258
0.007
Std. Error
2.296
0.184
0.227
0.349
0.275
0.304
0.049
0.054
0.101
0.063
0.534
0.596
-0.143
0.103
-0.151
-1.394
0.169
5.215
1.047
-0.129
-0.933
-0.167
-0.261
2.023
0.176
0.223
0.346
0.271
0.301
0.645
-0.062
-0.278
-0.070
-0.091
2.578
5.953
-0.575
-2.696
-0.618
-0.869
0.013
0.000
0.567
0.009
0.539
0.389
0.056
0.099
0.065
0.561
0.577
-0.147
0.098
-0.155
-1.496
0.141
5.797
1.020
-0.159
-0.951
-0.226
1.726
0.168
0.215
0.343
0.248
0.628
-0.077
-0.284
-0.095
3.359
6.069
-0.741
-2.775
-0.910
0.001
0.000
0.462
0.008
0.367
The coefficients in Table 8 and Table 9 show that variable Critical drivers and
BMOT has a significant impact on the outsourcing since their prob value is <0.05.
Therefore, the null hypothesis that there is no impact of Critical drivers and BMOT was
rejected after applying backward stepwise multiple linear regression as the first backward
step. If critical drivers increase by 1 unit, the outsourcing increases by 1.047 indicating the
positive impact, while the BMOT has a negative effect. As it increases by 1 unit, the BMOT
decreases by 0.933 and the prob value is 0.009. Similarly in all the backward steps as they
were taken by the model, it is shown that the critical drivers have a positive impact and the
BMOT has the negative impact while other variables are not statistically significant because
their prob values are > 0.005. Therefore, it has been accepted that there is no impact of these

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variables on outsourcing of telecommunication. As in the last backward step, the BMOT was
the only taken but having the same behaviour of a negative impact, as shown in
Step 7 (Table 10).
Table 9. Coefficientsa. b. Backward Multiple Linear Regression
Model
3 SFER
Outsourcing
(Constant)
Critical Drivers
BMOT
Desires
4 SFER
Outsourcing
(Constant)
Critical Drivers
BMOT
Desires
5
Outsourcing
(Constant)
Critical Drivers
BMOT
6 Gain Better Results Using
Outsourcing
(Constant)
7
Critical Drivers
Unstandardized
Coefficients
B
Std. Error
-0.252
0.298
Standardized
Coefficients
Beta
-0.088
Sig.
-0.845
0.402
-0.142
0.097
-0.149
-1.461
0.150
5.254
1.000
-0.963
-0.232
-0.210
1.556
0.165
0.341
0.247
0.292
0.616
-0.287
-0.097
-0.073
3.377
6.054
-2.824
-0.939
-0.721
0.001
0.000
0.007
0.352
0.474
-0.152
0.096
-0.160
-1.583
0.119
4.753
0.992
-0.985
-0.267
1.386
0.164
0.338
0.241
0.611
-0.294
-0.112
3.429
6.046
-2.915
-1.106
0.001
0.000
0.005
0.274
-0.146
0.095
-0.154
-1.536
0.130
4.054
1.014
-1.065
1.236
0.163
0.331
0.625
-0.318
3.280
6.216
-3.218
0.002
0.000
0.002
-.150
0.095
-0.158
-1.573
0.121
3.693
0.966
1.230
0.162
0.595
3.002
5.952
0.004
0.000
Table 10. Coefficients - Backward MLR for BMOT

Model
7
BMOT
Unstandardized
Coefficients
B
Std. Error
-1.053
0.335
Standardized
Coefficients
Beta
-0.314
Sig.
-3.143
0.003
The priority of this research to examine the relationship between outsourcing, critical
drivers, core activities and benefits met by outsourcing in telecommunication has no impact
on Outsourcing, Desire benefits consumers receive. Disadvantages are more compared to
advantages at the employment level, better result by strategic planning, and social, financial
and ethical responsibilities, risks reduction related to outsourcing as well as their impact on
outsourcing on telecommunication business by applying multiple linear regression.

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It has been found, after applying the correlation and multiple linear regression
technique that the critical drivers and benefit met by outsourcing telecommunication in
Pakistan (BMOT) are significantly correlated while the other factors do not have a significant
relationship and they also have a significant impact as shown by the multiple linear regression
technique. Therefore, both factors are important for telecommunication outsourcing in
Pakistan. The further research may lay other factors for the outsourcing in Pakistan. The
telecommunication businesses need to carefully consider factors related to the outsourcing.
Hypotheses assessment summary. The undertaken analysis of factor hypotheses with
their coefficient significant and insignificant prob values (Table 11).
Table 11. Assessment & Summary of Hypotheses
H1
H2
H3
H4
H5
H6
H7
H8
Hypotheses
Critical Drivers have no impact on outsourcing.
Core Activities have no impact on outsourcing.
Benefits met by outsourcing in telecommunication have no impact on outsourcing.
Benefits desired by consumers have no impact of outsourcing.
Disadvantages outnumber advantages to the employment level has no impact on
outsourcing.
Better result by strategic planning has no impact on outsourcing.
Social, Financial and Ethical responsibilities fulfilment has no impact on outsourcing.
Risks reduction related to outsourcing has no impact on outsourcing.
P-value
0.000
0.563
0.010
0.556
0.596
0.169
0.401
0.894
The hypotheses of H1 and H3 have been rejected as the prob values are < 0.05 and both
the factors have significant impact on the telecommunication outsourcing in Pakistan while
the hypotheses (H2, H4, H5, H6, H7 and H8) have been accepted as their p-values are >0.05 and
they have no impact on the telecommunication outsourcing.
Conclusions and Recommendations
Conclusions: The research done in different countries cause no doubt about the
impact of dynamic global markets, level of liberalism of economy and ongoing social changes
affecting society values on the processes of outsourcing. The opportunities have increased in
the global businesses such as telecommunication, transportation, information systems,
communications, etc. The competitive advantages related to inventions, innovations and
globalization growth opened new ways of outsourcing.
The research expands the horizon of science in relevance to the awareness of
outsourcing in telecommunication and reveals the importance of the factors examined via the
hypotheses for the improvement of the organization effectiveness.
This research paper on the outsourcing has considered the telecommunication business
in Pakistan. Notwithstanding, it might be useful to telecommunication business leaders from
different countries. In this respect, different reasons have been examined as correlation and
multiple linear regression methodology has been applied to check how the reasons correlate.
In this regard, the SPSS software has been used to analyze the dataset and make the results of
methodology. The correct methodological access allowed obtaining reliable results based on
calculations. The regression analysis, critical drivers and BMOT are statistically significant.
Critical drivers have a positive impact taking positive beta (), while BMOT of negative beta
() have a negative impact. Therefore, these two factors are more considerable for the
outsourcing of telecommunication in Pakistan while the others are not so much important
because their prob values are greater than 0.05.

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This paper has presented the reasons that have been selected by the study of much
research and applied the methodology that was applied in the studied research. The
methodology, after it was carefully studied and applied on the dataset, it is suggested that the
telecommunication businesses in Pakistan should be outsourced but the consideration of
correct reasons is necessary. Considering the mentioned, in future the research hypotheses
could be examined in other research in the countries of different economic and social climate
with a particular focus on the impact of different levels of liberalization and society values on
outsourcing and its effectiveness.
Recommendations: The top managers of telecommunication business companies are
recommended to pay attention to the identified main factors that constitute critical drivers and
BMOT to consider them while planning the strategy of outsourcing. It is, therefore,
recommended that while outsourcing the telecommunication businesses in Pakistan it would
be better to outsource the Critical Drivers and BMOT as these are the reasons of better
leverage of the telecommunication businesses in Pakistan, whereas other reasons show as not
being supportive for the telecommunication businesses to be outsourced, namely, anticipated
benefits from outsourcing in telecommunication, core activities, desired benefits received by
consumers, as well as fulfilment of social, financial and ethical responsibilities, and, finally,
the benefit received at the consumer end.
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VERSLO RANGA TELEKOMUNIKACIJOS PRAMONJE: PAKISTANO ATVEJIS
Rizwan Raheem Ahmed, Jolita Vveinhardt, Nawaz Ahmad, Mujeeb Mirza
SANTRAUKA
Pasaulins telekomunikacij industrijos tendencijos rodo orientavimsi bendrj ilaid mainim ir
didjant poreik bti konkurencingesnmis tarptautinse rinkose. Konkurenciniai pranaumai, susij su
iradimais, inovacijomis ir globalizacijos spartjimu, atvr kelius augti verslo rangai. Tai aktualu tiek
ekonomikai isivysiusioms, tiek besivystanioms alims, juolab, kad besivystani ali telekomunikacij
srityje verslo rangos tendencijos nra itin plaiai nagrintos. Tyrimu siekiama ianalizuoti vyraujant itekli
perklimo reikin, taip pat jo poveik verslo ilaidoms telekomunikacij versle Pakistane. iame kontekste
vertinamos verslo galimybs pagerinti organizacij veiklos rezultatus nekuriant nepageidaujamo rizikos laipsnio
ir ilaikant aukt klient pasitenkinimo lyg. Siekiant tikslo, tiriamas itekli perklimo dominavimas Pakistano
telekomunikacij pramonje, o ityrus itekli perklimo egzistavim, jis analizuojamas vairi kritini veiksni
poiriu, taip pat tiriamas itekli perklimo poveikis verslo vykdymo katams Pakistane.
Analizuojant rangos fenomen ir jo poveik Pakistano telekomunikacijos srityje veikianio verslo
katams, pasitelktas udaro tipo klausimynas, apklaustas 261 respondentas i telekomunikacij srities
vadovaujaniojo personalo. Taikyta daugybins tiesins regresijos metodika. Ianalizavus mokslin literatr,
atrinktas platus verslo rangos prieasi spektras. Atliktas apraomosios ir inferencins statistikos testas, taikytas
modelis, kuris buvo silomas ir anksiau atliktuose panaaus pobdio tyrimuose. Analizuotos 42 skirtingos
prieastys, atskleidianios telekomunikacij verslo specifik tiek naudos darbuotojams, tiek naudos klientams
atvilgiu. Nustatyta, kad su darbuotojais susijusioje sferoje trkum yra daugiau nei privalum, geresni rezultatai
gaunami taikant strategin planavim, socialin, finansin ir etin atsakomyb bei mainant su ranga susijusi
rizik. Analizuotos prieastys koreliuoja arba itin pozityviai arba negatyviai, tai traktuojama kaip verslo rizika ir
kiti trkumai. Daugybin regresija parod, kad tik kritiniai veiksniai ir itekli perklimo nauda
telekomunikacijoje yra statistikai reikmingi. Jie susideda i kasdieni ilaid mainimo, kapitalo ilaid
optimizavimo, vadovybs kontrols, lankstumo, nauj technologij prieinamumo, gyja nauj galimybi
papildyti esam know-how, perskirstyti ir sutelkti dmes iteklius, ir daro teigiam poveik telekomunikacij
verslui Pakistane. Telekomunikacijos verslo srityje naudojant verslo rang rekomenduojama atkreipti dmes
tokius faktorius, kaip socialin, etin, finansin atsakomyb.
REIKMINIAI ODIAI: telekomunikacij pramon, verslo ranga, kritiniai veiksniai, koreliacija, daugybins
linijins regresijos.

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Appendix I
The Business Outsourcing: Case of Telecommunication in Pakistan
Questionnaire
(ANNEXURE-1)
Q1: Gender
Male Female
Q2: Age (in years)
Less than 30 30-40 40-50 More than 50
Q3: Professional Experience (in years)
Less than 5-10 10-15 More than 15
Q4: Respondent
Director Manager GM Vendor
Q5: Education
Intermediate Graduate Masters Ph.d Others
Q6: Income (in Thousands)
Less than 20 21-30 31-40 40-50 Above 50
Q7:Organization
PTCLWarid Telenor Zong Ufone Mobilink
(ANNEXURE-2)
Strongly Agree
Agree
Do not Know
Disagree
Strongly Disagree
=
=
=
=
=
5
4
3
2
1
Questions
5 4 3 2 1
Q8: Given the market environment, Is outsourcing viewed as key lever for the business?
Q9: What are the critical drivers and obstacles for outsourcing?
a) Reduce Opex1 / Optimize Capex2
b) Head count control / Flexibility
c) Access of new technology
d) Acquire new capabilities complement existing know-how
e) Reallocate and focus on resources
Q10: Do companies currently outsource core activities?
a) Networking
b) IT
c) Marketing
d) HR
e) Customer Care
Q11: Were the expectations for benefits met by outsourcing in Telecommunication?
a) Competitive advantage
b) Reduced security costs of the core workforce
c) Access to required skilled core workforce
d) Reduced costs for services
e) Increases skills and technologies by investment
f) Changed the organization role and responsibilities to achieve objectives
g) Increased workforce commitment to achieve objectives
h) Removed the structural barriers to change
i) Increased labour productivity
Q12: Are desired benefits consumers end receive?
a) Optimized satisfaction level
b) Cheap and better quality / Increased demand / attracted new consumers

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Questions
5 4 3 2 1
c) Retained existing consumers / brand loyal
d) Received better quality than before outsourcing
e) Inquiry is received about the product satisfactorily / Knowledge of products
Q13: Are there more disadvantages as compared to the advantages in telecommunication Outsourcing to
the employment level?
Q14: Do telecommunication businesses believe they could gain better results using strategic frameworks for
planning and managing IT outsourcing?
Q15: Organizations are meeting their social, financial and ethical responsibilities having implemented the
outsource strategies in terms of employee?
a) Balancing the interests of various stakeholders [e]
b) Increased the Leadership effectiveness [e]
c) Increased the level of process integrity [e]
d) Reduce waste and increase profits [f]
e) Maintaining clear and updated documentation about all purchases and sales [f]
f) Properly deal with money and company resources [f]
g) Do the employees know their rating of performance?[s]
h) Do the employees know their appraisals?[s]
i) Do the employees are aware of their seniority on the basis of experience?[s]
j) Do the employees receive all benefits properly?[s]
Q16: Is outsourcing for the sole purpose of reducing costs effective and enhances overall
profitability of the organization?
Q17: Which of the followings are some of the unfavourable outcomes in determining the risks associated
with the Outsource Telecommunication?
a) Hidden Costs
b) Unexpected transition and management costs
c) Switching costs
d) Cost of delayed delivery / non-delivery
e) Loss of organizational competencies / critical skills
f) Poor quality and reliability
* e= Ethical, f=Financial, s= Social
*1Reduce Operational Expenses, 2Optimize Capital Expenses

The Business Outsourcing in Telecommunication Industry Case of Pakistan

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R.R. Ahmed, J. Vveinhardt, N.

ISSN 1648 - 4460

Implementation of IT and Innovations: Implications for Business

Ahmed, R.R., Vveinhardt, J., Ahmad, N., Mirza, M. (2014), The

BUSINESS & ECONOMICS