Information Technology Outsourcing Success Research Articles

IT vendor integration as catalyst of IT outsourcing success

PurposeThis paper aims to explain how small- and medium-sized firms (SMEs) create information technology (IT) business value through blended IT outsourcing (ITO). The explanatory framework it proposes enables SMEs to replicate IT capability outcomes (i.e. enhance their economic, strategic and technological competences, namely, ITO success) by endorsing an ITO strategy catalyzed by IT vendor integration.Design/methodology/approachThis study uses covariance-based structural equation modeling to test the proposed research model. Data are collected from 251 knowledge-intensive business SMEs located in Science and Technology Parks in Spain.FindingsThe results demonstrate empirically that SMEs can replicate IT capability benefits (i.e. enhance their non-IT competences) through blended ITO in which IT, conceptualized as a transversal supporting activity, is outsourced to an IT vendor while the value creation process remains with the buyer. The integration (i.e. process integration and information sharing) of an IT-proficient vendor catalyzes ITO success. More specifically, the results show that, although process integration is not directly related to competence enhancement, fosters information sharing, which directly facilitates ITO success. The results also show that IT vendor proficiency accounts for ex ante trust.Practical implicationsManagers should think of transformational ITO as a strategy to enhance firm competences. For blended ITO strategies to succeed, managers must have a comprehensive understanding of the business they run, as it is important to create conditions that foster inter-firm information sharing. To achieve these conditions, managers should take special care in selecting boundary spanners, who are the pivotal links in competence enhancement.Originality/valueWhile most research focuses on ongoing trust (i.e. trust develops as ITO evolves), this study focuses on initial (i.e. ex ante) trust and analyzes IT vendor proficiency (expert, experienced and reputed) to examine trust as an antecedent of ITO. This study also draws on previous conceptualizations of vendor integration to develop and analyze a two-step integration model to explain how IT vendor integration (i.e. process integration and information sharing) catalyzes enhancement of the buyer’s non-IT competences. This study focuses on SMEs, which are often neglected in ITO studies.

The Role of Formal and Relational Governance in Information Technology Outsourcing Success: A Research in Aviation Industry

Örgütler arası ilişkilerde biçimsel yönetişim taraflara yasal bir koruma mekanizması oluştururken, ilişkisel yönetişim ise bir ilişkide öngörülemeyen durumlar oluştuğunda örgütlerin daha esnek tepkiler verebilmesini sağlamaktadır. Bu araştırmada bilgi teknolojileri dış kaynak kullanımı ilişkisinde biçimsel (sözleşme) ve ilişkisel (esneklik, bilgi paylaşımı ve dayanışma) yönetişim mekanizmalarının rolünün ortaya çıkarılması amaçlanmıştır. Bu amaçla özellikli bir sektör olan havacılık sektörüne odaklanılmış ve bu alanda ampirik bir araştırma gerçekleştirilmiştir. Araştırmanın sonucuna göre Türkiye’de faaliyet gösteren havacılık işletmelerinin BT dış kaynak kullanımı başarısında sözleşmeler ve ilişki normları ayrı ayrı etkili olmaktadır. Bunun yanı sıra biçimsel ve ilişkisel yönetişim mekanizmalarının birbirinin ikamesi değil tamamlayıcısı olduğu sonucuna ulaşılmıştır.

IT outsourcing success: A dynamic capability-based model

This study proposes and tests a model of information technology outsourcing (ITO) capabilities as antecedents of ITO success. Building on the dynamic capabilities perspective (DCP), the model posits that ITO sensing, ITO seizing, and ITO orchestrating capabilities will influence ITO success by way of both successful reconfiguration of IT solutions and successful delivery of IT services. Building on extant ITO research, the model also hypothesizes that contract management capabilities and relationship management capabilities will influence ITO success via the successful delivery of IT services. Data from a cross-sectional survey of 152 large U.S.-based organizations in various industries were analyzed with PLS. The results support the hypothesis that successful reconfiguration mediates the effect of dynamic capabilities on ITO success. They partially support the hypothesis of successful delivery as mediator of the effect of dynamic capabilities on ITO success. The hypothesis of successful delivery as a mediator of the effect of relationship management capabilities and contract management capabilities on ITO success is supported only for relationship management capabilities. The study offers a theoretical anchoring for the conceptualization of ITO capabilities, which complements the rich and context-specific case-based literature of ITO capabilities and extends current research by adding to existing explanations of how ITO success is achieved.

Congruent patterns of outsourcing capabilities: A bilateral perspective

Despite the extensive proliferation of Information Technology Outsourcing (ITO), firms often obtain unsatisfactory outsourcing outcomes due to the lack of appropriate outsourcing capabilities of a client or their vendor. ITO clients strive to enhance outsourcing performance by establishing their own outsourcing capabilities as well as contracting with capable vendors to meet their strategic needs. Thus, for the success of an ITO project, it is imperative to find an effective combination of complementary outsourcing capabilities on both sides. However, knowledge of how to identify and develop a set of appropriate outsourcing capabilities of both client and vendor has yet to be developed. This study aims to fill this knowledge gap by elaborating on the configurational mechanisms of outsourcing capabilities from a bilateral perspective, which explicate how multiple types of client and vendor outsourcing capabilities combine into configurations simultaneously to produce high ITO performance. First, based on the ITO literature, we develop a conceptual framework that identifies three key types of outsourcing capabilities. Then, with the matched dataset collected from a client and their vendor, we conduct a fuzzy-set qualitative comparative analysis (fsQCA), which is a set-theoretic configurational method to investigate the systemic and holistic interdependencies among key outsourcing capabilities that produce high outsourcing performance. On the basis of the conceptual framework and empirical findings, we present four viable propositions to build configurations of client and vendor ITO capabilities that can achieve ITO success with theoretical and practical implications.

Governance structure in IT outsourcing: a network perspective

Purpose– The governance of information technology outsourcing (ITO) has been identified as an essential determinant for ITO success. Prior studies have shed light on effective governance structures in different organizational contexts. This study aims to advance this prior knowledge by exploring how interpersonal networks, as an important aspect of such context, reflect and influence ITO governance.Design/methodology/approach– A single case study was conducted from a vendor’s perspective in an ITO dyad. Social network analysis was leveraged to reveal the interpersonal networks, with whole-network analysis on 24 team members in an ITO vendor company. In addition, open-ended interviews with six selected team members were utilized to identify the perceived governance structure.Findings– The findings of this study suggest certain features of interpersonal networks, i.e. network density and cross-network comparison, can reflect governance structure in multiple aspects. Meanwhile, the authors also argue that interpersonal networks can influence the form of governance structure.Research limitations/implications– As a single case study, the context of the research site cannot be ignored in the inference of findings. To increase the confidence for further generalization, future empirical studies are needed especially in contrasting sites, such as ITO relations based on network governance.Originality/value– This study associates intra-organizational characteristics of the vendor to the inter-organizational governance structure of the ITO relationship. It also provides an innovative methodology for both researchers and practitioners to assess ITO governance structure.

Risk Factors in IT Outsourcing Partnerships: Vendors’ Perspective

In recent years, information technology (IT) outsourcing is a widespread practice in the global business today. Business organizations decide to transfer such kind of services to other firms (vendors) in search of cost-related and other competitive advantages. Identification and handling of risks appears to be crucial for IT outsourcing success. The objective of this article is to identify the main risk factors related to IT outsourcing partnerships from the perspective of Bulgarian vendors on the basis of empirical study. The analysis is based on theoretical grounds provided by the specialized literature and utilizes selected results from a survey of outsourcing relations between Bulgarian vendor organizations and their clients (outsourcers). The study is focused on the risk factors that could potentially hinder the formation and development of strategic outsourcing partnerships. Some of these risk factors act as threats for outsourcing success and their potential effects need to be considered within the risk mitigation strategies of IT outsourcing service providers.

The Russian and Ukrainian Information Technology Outsourcing Market: Potential, Barriers and Management Considerations

This study describes the advantages and disadvantages of information technology outsourcing to Ukraine and Russia. The results assist technology managers who wish to make an informed decision on whether or not to outsource information technology projects to Russia/Ukraine, considering two important issues: (1) the political, economic, and social landscape, and the advantages and disadvantages of choosing to locate information technology projects in the region and (2) the Russian/Ukrainian information technology workers’ teamwork perceptions. By understanding the countries and the potential information technology workers within that country, organizations should be able to develop management policies to improve chances of success. While the results indicate that well-educated and teamwork-oriented Russian and Ukrainian information technology employees may increase the chances of information technology outsourcing success, the authors remain skeptical regarding the political, economic, legal, social, and business environments.

Quality of relationship on information technology outsourcing for organizational success in hospitality industry

Purpose – This paper aims to investigate the effects of vendor – client relationship on organizational success in the hospitality industry. The relationship between vendors and clients regarding information technology outsourcing does not always go in harmony. In the viewpoint of hospitality practitioners, information technology (IT) providers do not necessarily abide by the given promises stated on contracts, all the time. The service flows, which are mostly generated by the lack of quality relationship between vendors and clients directly affect hotels’ organizational performance. Design/methodology/approach – Data were collected by an online survey and analyzed using multivariable statistics (path analysis) to determine the effects of service quality and relationship quality on outsourcing success, and its effect on organizational performance. Data from 102 valid responses received from ten different countries, representing 230 hotels in total were analyzed. Findings – Service quality and relationship quality, which are two dimensions of outsourcing relationships, were found to be positively related to outsourcing success (r = 0.60 and 0.70, p < 0.01, respectively) and intangible organizational performance (r = 0.20, p < 0.05; 0.26 and 0.27, p < 0.01, respectively). Research limitations/implications – The research was designed to investigate the IT outsourcing service receiver’s (client) perspective. The IT service provider’s (vendor) perspective is disregarded. Disturbance results are very high (i.e. more than 0.95). This may well be the case that certain facets of the outsourcing success construct are not adequately represented by the chosen indicators. Research results may reveal an idea about the research subject, in general, but may not be generalized to the whole industry due to its sampling size. Finally, the survey was conducted online, and all online research restrictions were applicable to this research such as receiving very limited response rates. Practical implications – The results of this research provide important information for practitioners in the hospitality industry and IT service providers. Relationship quality between vendor and client was observed to be the most determinant factor in IT outsourcing success. Social implications – The proposed model may well serve as a framework for further examining mediating and possible moderating variables. Originality/value – There is limited research in the previous literature investigating the relationship between information technology vendor and client, in terms of service quality and relationship quality in hospitality industry. This paper may serve to fill in this gap.

IT outsourcing success in the public sector

Recent studies on IT (Information Technology) outsourcing reveal the growing trend and widely accepted management practice of IT outsourcing in the public sector. To achieve more from this practice it is essential to identify and examine the success factors. In this regard, this study conducts an empirical investigation on IT outsourcing projects for e-government. A framework is proposed and 13 IT outsourcing success factors from the private sector are identified through a literature review. The framework demonstrates the impact of four categories, organizational environment, contract/project characteristics, project management, and partnership management on IT outsourcing. A survey of IT managers responsible for managing IT outsourcing projects in Korean government organizations was conducted and 178 IT outsourcing projects for e-government initiated by 56 different government organizations were analyzed. The findings are then compared with general beliefs on IT outsourcing in the private sector. Findings and lessons from the empirical investigation of this study provide useful guidelines for IT managers in the public sector.

IT outsourcing and impacts in Thailand’s financial institutions

Information technology outsourcing (ITO) studies have been the focus of researchers for decades. One topic has been the factors and impact of ITO on organizations. Inconclusive findings about relationships between the levels of ITO and ITO success demands further exploration on this issue. In Thailand, the National Electronics and Computer Technology Center (NECTEC) reported that the financial and banking industry has the highest spending on computer services primarily by outsourcing the core banking and service management system. Nonetheless, research on ITO in Thailand’s financial industry has been limited. This study is among the first to empirically investigate the relationship between the levels of ITO, defined as the percentage of IT activities and components selected to be outsourced, and ITO success, defined by the benefits received from outsourcing in Thailand. A three-pronged approach is used in this study. It began with a comprehensive literature review. This was followed by in-depth expert interviews with representatives from financial institutions, academia, and outsource vendors, all of who offered opinions that shaped the development of the research model. A survey was then carried out with 428 IT personnel from the Thai financial sector. The results were analyzed using structural equation modeling (SEM). Contrary to previous researches, this study found that internal uncertainty and internal IT skills were two factors that do not affect the levels of ITO, while transaction costs and specific assets do. In addition, it was found that levels of ITO have impacts on ITO success. In a real world application, this study focuses on the different levels of ITO implementation among Thailand’s top five banks and their effects on ITO success. The findings increase researchers’ understanding regarding the factors that affect the levels of ITO and suggest that practitioners must consider the levels of ITO, in addition to other factors, when making ITO decisions. The framework can help practitioners optimize ITO practice for successful ITO outcomes.

Information security and mutual trust as determining factors for information technology outsourcing success

Information security and mutual trust have been the major stumbling blocks in the adoption of information technology outsourcing (ITO), clients were skeptical about possibilities of ITO as a mean of bridging the gap between information technology (IT) and business community. This development had made it difficult for ITO to be practiced in isolation. Business transaction is done between two or more interested parties, it is imperative for the parties to operate successfully only in an environment where mutual trust and information security are guaranteed and respected. This research looks into the impact of information security and mutual trust on ITO contracts, by investigating how the ITO suppliers (big organizations and small and medium enterprises SME) in Malaysia interpret the concept of information security and mutual trust and their effects on ITO dealings. This research finds out that information security and mutual trust were considered as the bedrocks of ITO success especially among the SMEs while big organizations see information security and mutual trust as organization’s ladder to success. Though, many interviewees considered information security as an integral part of mutual trust. Interviews were conducted among some ITO suppliers in Malaysia and MAXQDA is used as the analysis tool. Key words: IT outsourcing, information security, mutual trust, developing countries, ITO suppliers/vendors, small and medium-scale enterprises SMEs, globalization.

IT Outsourcing Success: A Psychological Contract Perspective

Information technology (IT) outsourcing success requires careful management of customer-supplier relationships. However, there are few published studies on the ongoing relationships, and most of these adopt a customer perspective, de-emphasizing suppliers. In this study, we look at both customer and supplier perspectives, by means of the psychological contract of customer and supplier project managers. We apply the concept of psychological contract to perceived mutual obligations, and to how such fulfillment of obligations can predict success. Our research questions are (1) What are the critical customer-supplier obligations in an IT outsourcing relationship? and (2) What is the impact of fulfilling these obligations on success? We use a sequential, qualitative-quantitative approach to develop and test our model. In the qualitative study, we probe the nature of customer-supplier obligations using in-depth interviews. Content analysis of interview transcripts show that both customers and suppliers identify six obligations that are critical to success. Customers perceive supplier obligations to be accurate project scoping, clear authority structures, taking charge, effective human capital management, effective knowledge transfer, and effective interorganizational teams. Suppliers perceive customer obligations as clear specifications, prompt payment, close project monitoring, dedicated project staffing, knowledge sharing, and project ownership. In the second quantitative study, we assess the impact of fulfilling these obligations on success through a field study of 370 managers. Results show that fulfilled obligations predict success over and above the effects of contract type, duration, and size.