Successful IT Outsourcing Engagement: Lessons from Malaysia

Abstract

AbstractThe literature on IT outsourcing is well‐developed with clear explanations of what may determine success. The context of IT outsourcing studies has primarily focused upon North American and European companies, seeking low‐cost economies from links with developing nations to gain competitive advantage. These studies may not be generalisable to companies based in developing economies, who may be trying to replicate successful outsourcing approaches. If the focus of outsourcing is primarily one of cost cutting, IT policy makers and managers in Malaysia cannot assume that successful outsourcing determinants are of any significance to them. This article therefore addresses the question of how generalisable the determinants of successful IT outsourcing are to a Malaysian context. The study is based upon a sample survey of companies in the Penang region of Malaysia. It presents and tests hypotheses on the nature of outsourcing relationships. In conclusion, Malaysian managers can take some comfort in that the lessons of outsourcing can be generalised to their context. Of particular note is the value of selective outsourcing in comparison to full outsourcing and the impacts of communication and management commitment.