The Gestalt of an information technology outsourcing relationship: an exploratory analysis

Abstract

Recent market indicators point once again towards a substantial growth of Information Technology (IT) outsourcing in the developed economies. Outsourcing has now become a major option considered for handling some or most of an organization’s information systems and technology requirements. The growing concern however, of organizations either evaluating or actively involved in IT outsourcing, is the management and ensuing development of what many researchers in the literature have coined the Outsourcing Partnership. The envisaged relationship between the client and the vendor, has been found to take on a certain gestalt which when formalised, consists of two key parts: the contract and its operationalisation. The uniqueness however of the IT outsourcing relationship is defined by the sum of its parts. In this context, we developed a model that is based on Exchange Theory and Contract Law, which provides an overview of what an outsourcing relationship entails. The model is substantiated, through research into client and vendor companies to ascertain the current relationship building practice. The resulting model derives its usefulness from its heuristic and analytical potential, in a fashion that captures both the outsourcing relationship’s contractual, social, and economic characteristics, and additional elements found to have relevance in practice. ACKNOWLEDGEMENTS The author is indebted to Leslie Willcocks, Templeton College, Oxford for reading the first draft and to the anonymous reviewers from ICIS 1997. This research is funded by the 1996-1998 Business Scholarship Award from Lloyd’s of London Tercentenary Foundation.