The Role of Technology in Outsourcing Practices in the Oil and Gas Industry

Abstract

This study examines the role of technology in outsourcing practices in the oil and gas industry. The aim is to verify the association between technology and outsourcing and their relevance as solution enablers that organisations within oil and gas sector should employed to facilitate future growth. The study assesses how firms benefit from outsourcing practices as a growth strategy to achieve competitive advantage. The resource-based view (RBV) theory was adopted as the main organisational theory that underpins this study. The theory justify outsourcing and technology through resource-related advantages and capabilities. More so, the resource-based view supports the idea that firms can strengthen their internal operations to achieve superior performance by exploiting external outsourcing arrangements through access to new technologies. These enablers are considered as the main source of firm’s sustainable competitive advantage when they are valuable, rare, imperfectly imitable and non- substitutable.

Comprehensive reviews were carried out on the evolution and current state of outsourcing practices, as well as new technologies to determine their impacts in driving performance within oil and gas industry. In attempt to answer the research questions, a self-administered questionnaire was adopted. A total of 200 administered questionnaires were sent to Nigerian oil and gas companies. Out of 200 questionnaires sent, 120 were returned which amount to 60% response rate. From the 120 questionnaires received, only 100 were considered valid for further analysis. Explorative interviews were conducted to validate the findings from the surveyed data. The interviews results also provided further clarity and understanding, in terms of operational frameworks, additional measures and contextual definitions, which the participants consider important beyond those obtained from the literature.

The outcomes of the survey clarify the impacts of outsourcing technology in oil and gas industry with a view to how this affected the long-term business performance of the organisations. The study identified that the most important drivers of outsourcing practices in oil and gas industry is access to new technologies. Additionally, a moderating construct that was linked to the deployed technologies and outsourcing drivers provided further enhanced performance measures. The evidence shown that in addition to performance advantage of having access to enabling technologies and outsourcing initiatives, organisations’ competitive performance can be further enhanced through the trio of effective quality management, expertise best practices and modern infrastructure. The implication of this research may demonstrates that implementation of outsourcing initiatives and technology solutions will be a significant growth strategy, particularly to SMEs, and may also provide economic opportunities that are not sufficiently available in most developing oil and gas economies.