Outsourcing Decision-making: A Multiple Case Study

Abstract

This paper investigates outsourcing decisions with a focus on what impact the decision-making process has on the outcome of the outsourcing decision. The paper briefly reviews the IT outsourcing literature to find that there is a lack of empirical research on IT outsourcing decision processes and the effect they have on outsourcing outcomes. The paper reviews the strategic decision-making literature, which provides useful constructs for describing and assessing decision-making processes and their effect on outcomes. This paper applies these constructs to IT outsourcing decisions at four large Australian based companies. Of the four organisations reviewed, two organisations decided to offshore outsource application development services. These two organisations were outsourcing for the first time and the decision was triggered by a powerful stakeholder that pushed the idea from inception through to implementation. The other two organisations studied had renewed their existing IT outsourcing contracts. In both of these cases, a rigorous and highly formalised decision process was followed. The paper finds that the adoption of different process types leads to different results. We conclude that decision makers should adhere to more rational and formalized discovery process resulting in better decision outcomes.