Outsourcing and the Spin-off Arrangement: Lessons from a Utility Company

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10 Citations (Scopus)

Abstract

Spinning off non-core functions into separate businesses has become increasingly prevalent as organisations restructure and specialise in core areas. The spin-off arrangement is often used as an alternative to outsourcing functions to an independent service provider. Although spin-offs have been increasing in prominence, there are few studies in the literature that provide detailed insights into development and implementation. This paper focuses on a privatised utility company that spun off a number of functions into a separate commercial business. As well as developing a new client base the spin-off continued to provide services to the utility company. Although this arrangement was regarded as extremely successful, the development and implementation of the spin-off arrangement faced a number of difficulties. The paper considers the arrangement right from idea generation through to full development and eventual disposal. The development of the spin-off was considered along with the implications for the subsidiaries in the utility company. The paper provides a number of important lessons for organisations pursuing this type of outsourcing configuration.
Original languageEnglish
Pages (from-to)51-70
JournalJournal of General Management
Volume33
Issue number1
Publication statusPublished - 2007

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