Understanding and depicting service operations is important, as the contractual agreements have become more complex, particularly in offshore outsourcing. The purpose of this paper is to introduce the Service Machine as a metaphor and a parsimonious conceptual framework for analyzing outsourced service operations in a Business‐to‐Business‐to‐Consumer context. Conventional machines have frames or platforms that connect various components. The equivalent of a machine in services is a system of contracts linking a client, a service provider, and the end‐users. Clients have the interest to know how, when, where, by whom and with what instructions are their operations being produced. As a result depicting both the service operations and the contractual framework becomes increasingly important.
Through a review of the existing theoretical literature on outsourcing, operations management, contracting and governance, the paper explores a new conceptual model for governing outsourcing arrangements using an inbound voice call center as an example.
The paper argues that although several theoretical domains indirectly shed light on governing outsourcing and offshoring relationships, they typically approach the issue either from a contractual, governance, or process level. The paper elaborates on the assumptions that governance is needed in outsourced services, service production processes and contractual relations both need to be mapped, and the possibility of process‐contract co‐evolution studied.
The paper contributes to the outsourcing literature and to operations management research by developing a new conceptual framework, the Service Machine, for governing service operations in an outsourcing arrangement.
