Outsourcing Relations in the Economy and Entrepreneurship

The purpose of this article is to test the methodology of the ‘five forces of outsourcing’. The testing is based on the analysis of a wide range of industries within the long-term timeframe. The ‘five forces’ model is based on some well-known economic theories as well as on new theoretical frameworks. It is a comprehensive model and as such has no analogies in Russian or foreign economic science. To test the model an in-depth study has been undertaken in 2015–2018 on oil and gas and other mining and manufacturing industries, utility, metallurgy, logistics, IT, consulting and other sectors of the Russian economy. The research was based on various industry reviews, company data, information of regulatory bodies, etc. To test the hypothesis we conducted new surveys or, where applicable, used existing ones. The research has shown that outsourcing relations in the economy and outsourcing decisions of a specific firm are influenced by transaction costs, competitive advantages, trust and commitments and the level of economic development. These factors define whether the ‘sourcing cycle’ moves towards outsourcing or in-house operations. The evidence of the existence of the ‘sourcing cycle’ has been found in every analyzed industry, where firms under the influence of different factors switched there and back between outsourcing and insourcing of the same business processes. The ‘ive forces’ model has additional value. Not only does it explain the outsourcing processes within the economy, but it also facilitates the understanding of decentralization, privatization and delegation of power within a firm – the phenomena which are of the same nature with outsourcing