Governance Structure and Determinants on Sustainability in IT Service Outsourcing: Case-based Explanatory Study

Abstract

Purpose - As companies have been outsourcing parts of their processes in order to concentrate on their core competencies, it became important to maintain an appropriate relationship with their service providers in terms of governance structure and supporting mechanism to increase sustainability of the relationship between for realizing a supply chain performance. Design/methodology/approach - Most of the works assumed that all kinds of service provided have same characteristics. Based on case observations, we found there are a set of differences among different services in their characteristics. By exploring two typical service industries. Findings - First, IT service and logistics service, first we will show the difference between two industries in terms of service providing process using service dimensions. Secondly, we will recommend appropriate governance structure for each service industry. Lastly, based on findings, we will propose a set of remedy how to reduce uncertainty during service provision. Research implications or Originality- More specifically, we found that there is a set of different characteristics between IT services and logistics services. We developed a set of attributes to analyze the different characteristics between IT and logistics services and summarized the differences. Based on the different characteristics, we proposed that relational governance is more appropriate for managing relationship with IT service providers. In addition, we proposed a set of remedy to reduce output uncertainty of IT services in order to maintain sustainability with IT service providers.