Information Technology Outsourcing Research Articles

An Empirical Examination of Organizational Commitment Across Psychological Contract Matching Patterns in Information Technology Outsourcing (ITO)

An Empirical Examination of Organizational Commitment Across Psychological Contract Matching Patterns in Information Technology Outsourcing (ITO)

How to Lead and Control IT Outsourcing Projects in Data-Rich Environments: A Vendor's Perspective

Despite the growth of data-rich environments and the increase in data accessibility, studies have offered limited insights into how to lead and control information technology (IT) outsourcing projects to benefit from these trends. To address the research gap, this study investigates the effect of big data accessibility on project performance, and analyzes the moderating effects of vendors’ leadership styles and outsourcers’ control mechanisms from a vendor's perspective. Based on absorptive capacity theory, we develop five hypotheses and examine them using data from 195 IT outsourcing projects. The results show that big data accessibility has a positive effect on IT outsourcing project performance, but that the effect varies with vendors’ leadership styles and outsourcers’ control mechanisms. Specifically, the positive effect of big data accessibility is weakened by vendors’ transactional leadership and outsourcers’ behavior-based control, whereas it is strengthened by vendors’ transformational leadership and outsourcers’ outcome-based control. This study contributes to the literature by identifying distinct roles of different leadership styles and different control mechanisms in leveraging big data accessibility.

Do hospital data breaches affect health information technology investment?

Objectives Data breaches are a financial and operational threat to hospitals. In this study, we examine the association between a data breach and information technology capital and labor investment. Methods In this retrospective cohort study, we used American Hospital Association data from 2017 to 2019 and an unbalanced panel of hospitals with 6751 unique hospital-year observations. The breached group had 482 hospital-years, and the control group had 6269 hospital-years. We estimated the association between data breaches, information technology capital, and labor investment using the average treatment effect with propensity-score matching. Results From 2017 to 2019, hospitals experienced more hacking and information technology incidents but fewer thefts and losses. We found that hospital data breaches were associated with a 66% increase in employed information technology staff and a 57% increase in outsourced information technology staff. Breaches were not associated with information technology operating expenses and information technology capital expenses. Conclusion Higher information technology labor investment due to the remediation of data breaches is an added cost to the healthcare system. Hospitals and policymakers should consider initiatives to improve cybersecurity and protect patient data.

Client Peripheral Knowledge and Outsourcing Project Outcomes

ABSTRACT Client peripheral knowledge is the knowledge residing in the client organization regarding the specific technologies and methodologies needed to successfully complete an IT (information technology) project that has been outsourced by the client. Data is collected from 205 USA managers, who have overseen outsourced IT projects, to see if peripheral knowledge in their own client organization affected outsourced project processes and outcomes. The project processes examined are the degree of stability of requirements during the project, and the level of vendor activities to interface with the client. The project outcome is operationalized as client satisfaction, as well as project cost performance and time performance. We find client peripheral knowledge positively affects requirement stability and vendor activities to interface with the client; requirement stability in turn positively affects client satisfaction and time performance; and vendor activities positively affect client satisfaction, but levy a penalty on the cost performance and time performance.

RESEARCH OF ADVANTAGES AND DISADVANTAGES OF INFORMATION TECHNOLOGY OUTSOURCING

The article examines the advantages and disadvantages of information technology outsourcing. It is determined that outsourcing is one of the actual methods of increasing the efficiency of economic activity. It is emphasized that in the conditions of a significant increase in costs for modern information technologies; the practice of outsourcing acquires a special role. Conditional reasons have been determined; in the presence of which the company's management resorts to the services of external outsourcers. It has been proven that all models of information technology outsourcing; which are currently used in the production and economic activities of industrial enterprises; have their strengths and weaknesses; which must be known; researched; analyzed and taken into account when forming strategic and current plans and when managing the company The advantages and disadvantages of information technology outsourcing are described in detail. It has been proven that the advantages of IT outsourcing include increasing productivity by using the special knowledge of experts in specific areas of activity and market segments; and also enable the company to focus the attention of management and resources on the main (direct) tasks and on the development of specialized business activities. It was determined that the main disadvantage of IT outsourcing is the presence of certain difficulties in choosing a professional and adequate IT outsourcer. It is noted that the outsourcing of information services significantly affects the level of efficiency; flexibility and adaptability of industrial enterprises; contributes to reducing costs and increasing the quality of services.

Relational dynamics in information technology outsourcing: An integrative review and future research directions

AbstractThis paper reviews the literature on relational dynamics in information technology outsourcing (ITO) relationships, a type of interorganizational relationship (IOR) between client and vendor firms that can vary considerably in complexity. While relational dynamics are understood to reflect changes in an IOR ex‐post contract which can substantially influence relationship performance and development, prior IOR research is limited in its conceptualization. The extensive ITO literature offers fertile ground for exploring this limitation but has advanced different conceptualizations and is fragmented in empirical findings, which warrants a systematic assessment. We conduct an integrative review of 127 peer‐reviewed empirical studies to enhance our understanding of the constituents of relational dynamics. The findings reveal that relational dynamics involve the occurrence and management of tensions within and across four relationship development stages (transactional, strategic, transformational, and termination). For each stage and between stages, we identify the main tension, the firms’ strategies to manage the tension, and the outcomes. Based on these findings, we develop an integrative framework that offers a comprehensive and multifaceted conceptualization of relational dynamics, revealing that as ITO arrangements progress (or regress), partner firms are confronted with structural and transitional tensions inherent in relationship stability and instability. Based on this framework, we offer future directions for developing a more comprehensive understanding of relational dynamics in ITO and, more broadly, IORs.

Building a Reputation as a Business Partner in Information Technology Outsourcing

One noticeable trend in the maturing information technology (IT) outsourcing industry is the growing interest from client firms seeking to benefit from supplier-led innovations. Yet IT outsourcing suppliers still find it challenging to shift their reputation from the competent provision of a low-end service to a high-value innovative line of services, thus becoming known as business partners. We address this issue by examining the reputation formation efforts of an IT supplier experiencing a reputation deficit in terms of quality (its ability as a business partner) and intent (its intention to adopt trustworthy behavior). We develop a model based on a case study of a large IT supplier engaged in reputation formation with its outsourcing clients. We portray reputation formation as a process wherein an IT supplier alternately emits signals of quality and intent from a repertoire of signals. Our process model distinguishes between signaling at the market level, which relies on rhetorical mediums to broadcast a message promoting the supplier’s ability as a business partner, and signaling at the client level, which relies on substantive mediums such as demonstrations of the supplier’s ability to solve the client’s business problems and behavioral mediums that allow the client to assess the supplier’s intent to adopt trustworthy behavior.

Relational governance in the ITO: the role of self-determination theory and the mediating effect of control perceived

ObjetivoLos investigadores en la materia reconocen la importancia de la relación entre contratista y contratado en el proceso de externalización de las tecnologías de la información (TI). Sin embargo, poco se sabe sobre el impacto del perfil del gestor en este proceso. Así, el objetivo de esta investigación fue analizar el impacto de la percepción de competencia, autonomía y relación de los gestores públicos en la gobernanza relacional (GR), así como, identificar el efecto del control percibido en esta relación.Diseño/metodología/enfoqueEste estudio utiliza un abordaje cuantitativo para investigar el impacto de las características de comportamiento de los gestores de TI a partir de la teoría de la autodeterminación (TAD). Los datos fueron recolectados en instituciones públicas brasileñas que actúan en las áreas de educación, finanzas, estadística y tecnología, y las hipótesis fueron identificadas y evaluadas utilizando la técnica de modelado de ecuaciones estructurales por mínimos cuadrados parciales (PLS-SEM).ConclusionesLos resultados identificaron que la autodeterminación de los directivos está relacionada con la percepción de control, en consecuencia, repercute en el GR al proporcionar sentimientos de competencia y autonomía capaces de construir una relación beneficiosa con el proveedor de TI.Implicaciones prácticasEste estudio promueve la comprensión de que la alta dirección necesita apoyar la autonomía de los directivos para aumentar sus niveles de motivación intrínseca a la hora de gestionar las entregas de los proveedores.OriginalidadLa aplicación de la teoría de la autodeterminación al contexto de la subcontratación de TI proporciona nuevos conocimientos sobre la mediación del control percibido al explicar la relación entre las expectativas y motivaciones de los directivos como un importante impulsor de la GR.

The Interdependence of Coordination and Cooperation in Information Technology Outsourcing

One of the critical success factors in information technology outsourcing projects is how partners learn through interactions with each other. This learning facilitates the complex problem-solving processes and enables partners to take different perspectives, explore alternatives, and seek innovation in outsourcing projects. For this learning to occur, partners must strive to enhance collaboration, but generally, collaboration is viewed too narrowly as partners engage in coordination and cooperation independently of each other. Our framework suggests that learning is more effective when partners collaborate by cooperating to pursue jointly determined goals and coordinating to adjust their actions toward these goals. This study compares the independent model of collaboration with the interdependent model. The interdependent model suggests that coordination and cooperation mechanisms are interdependent and jointly influence learning outcomes. The findings show that the interdependent model provides a better explanation of the impact of coordination and cooperation mechanisms on relational learning than the independent model. This finding provides a more comprehensive understanding of relationship dynamics between partners. It also provides guidance for developing collaboration mechanisms that help synergize coordination and cooperation. Our study further shows that the perceptions of coordination and cooperation mechanisms are not symmetric between clients and vendors.

Elicitation of Key Factors to Support Information Technology Outsourcing in Technological Innovation Hubs: Applying a Multicriteria Analytical Framework

This work presents an analytical framework for eliciting key factors for successful relationships between parties in information technology outsourcing (ITO) projects. The proposal was based on a multicriteria analysis to identify key factors within the literature that were essential for the success of projects involving IT outsourcing. Using the multicriteria analysis method PROMETHEE II, the most important key factors were ranked according to the judgment of the managers of the companies in the innovation ecosystem of Alagoas, Brazil. The study was based on thirty-one judgment criteria that, in this case, were formed by the interviewed managers and twenty-one alternatives that were the key factors identified in the literature. This work contributes to composing a reference for the analysis of ITO projects and information governance, informing which factors should be prioritized according to the desired objective of the manager within the project. From the local perspective, the survey pointed to “quality production” as the most important factor, followed by “contract”, “top management engagement”, “risk management”, and “communication” as the most relevant factors for IT outsourcing success in the technological innovation hubs of Alagoas.

Outcome-based contracts – Linking technology, ownership and reputations

Outcome-based contracts (OBC) in information technology outsourcing have attracted much attention, but literature is relatively scarce on this topic. Though firm theories prefer hierarchy as the most protective form of governance for such transactions, the practice moves forward with many hybrid governance structures underpinned by automation and digital transformation technologies. The objective of this paper is to develop a conceptual framework that explains the preference for inter-firm arrangements in OBCs and exhibits the capabilities of these technologies in mitigating contract inefficiencies. The proposed framework narrows the gap in the literature for a concurrent view of the latitudinal (ex-post, ex-ante) and longitudinal (reputation) dimensions of the contract. We represent the OBC as a concurrent stochastic game in a probabilistic model checker. Testing of our propositions revealed that these technology assets are complementary and joint ownership is desirable under reputation effects, reputation transfers take place between the contracting parties in the same direction, and continuous reallocation of ownership is required to maintain joint ownership. Rapid technological advancement and industry maturity can gravitate the transaction towards common ownership. The reputation function using Fermi probability distribution in our model is a novel performance measure for the industry.

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.

Single-Sourcing vs. Multisourcing: An Empirical Analysis of Large Information Technology Outsourcing Arrangements

Single-Sourcing Versus Multisourcing: An Empirical Analysis of Large Information Technology Outsourcing Arrangements Policy Abstract As the information technology (IT) services landscape matures, clients are increasingly adopting multisourcing arrangements that involve multiple vendors. Although a large body of IS literature addresses issues of whether to outsource (to a single vendor), what types of contracts to use, and how to achieve optimal relational governance, little is known about the antecedents and consequents of the single versus multisourcing decision. Moreover, although conceptual and analytical models of single-sourcing versus multisourcing have been developed, there is no empirical IS research using a large-scale data set with rigorous econometric analysis that examines the antecedents and consequents of multisourcing in the IT context. This paper fills this void, using the transaction cost economic lens and a data set of 49,057 large IT outsourcing arrangements that spans multiple industries and dates back 25 years. For managers who plan to multisource IT outsourcing arrangements, this research provides guidance to minimize exchange hazards through a better understanding of the relationship between sourcing choice, client IT outsourcing capabilities, the competitiveness of the vendor landscape, and the number of IT services in an IT outsourcing arrangement. We provide empirical evidence that the choice between single-sourcing and multisourcing is material to the performance of outsourcing contracts, as an incorrect sourcing choice is likely to result in negative contract outcomes.

Strategic Behavior Categorization in Information Technology Outsourcing: An Analysis Based on Knowledge Transfer and Relational Governance

This paper proposes a strategic behavior categorization between the contractor and the provider in information technology (IT) outsourcing. We identified four behaviors (or attitudes) focusing specifically on the contractors’ attitudes: (a) conservative, (b) collaborative, (c) opportunistic, and (d) transformational. Theoretical concepts from IT Outsourcing, Relational Governance, and Knowledge Transfer were used to derive the study hypotheses. A questionnaire was developed to collect the information to test the hypotheses. An empirical analysis of a sample of 247 Brazilian companies was used, supporting the grouping of the companies as follows: 38.49% of them had the conservative attitude; 29.14% of them had the collaborative attitude; 14.97% of them had the opportunistic attitude; and 17.40% of them had the transformational attitude. We found that the relational attitudes should be adjusted to the individual contractors’ conditions, specific characteristics, and sectors. Our results also emphasize that the type of outsourced activity (traditional or customized) enables the managers to identify the need to balance the participation in relational governance. This study brings innovations to the understanding of the importance of the relationship between the contractor and the supplier, supporting, for example, the prioritization of new relational profiles according to the level of the IT service that was contracted, whether it is traditional or customized.

When Penalty Fails: Modeling Contractual Misincentives With Evidence From Portugal ITO Agreements

A misincentive is characterized as an incentive producing the opposite effect of motivating or preventing some specific action. In some circumstances, contract penalties such as sanctions and fines on late delivery or low-quality software encourage the irregularities instead of preventing them from occurring. The present study models misincentive behaviors in Information Technology Outsourcing (ITO) transactions as a Principal-Agent problem. Considering the non-linear relationship in software vendors’ cost structure and the client’s sensitivity to the product/service quality and delivery time, we offer theoretical modeling elucidating the best responses on agreements under incomplete and asymmetric information. Some empirical evidence of contractual misincentives is reported in outsourcing arrangements between private institutions and public administrations in Portugal. The contracts were divided into three categories: pure contracts with no incentive clauses, contracts with no explicit monetary penalties, and contracts under explicit sanctions. The results suggest that the knowledge of the penalty reduces the Agent’s uncertainty about the Principal’s cost structure and might lead them to intentionally delay the delivery of the technology.

A decision framework for cloud migration: A hybrid approach

Cloud computing is utilised for information technology outsourcing of either industries or organisations. There are several inhibitors and motivations related factors to determine whether one can embrace the cloud services or not. Therefore, this paper presents a holistic and flexible cloud decision framework by taking a wide spectrum weighted factors related to the acceptance or denial of the cloud services. To have sustainable decision and obviating the shortcomings of the existing approaches on the cloud service adoption, a deep understanding of organisation's business process requirements and cost implications is required. To utilise the proposed model, the functional and non-functional requirements associated to the business process of an adopter organisation must be specified. To reach a concrete decision, a hybrid approach is applied by incorporating the analytic hierarchy process and Delphi methods to prevent subjective outcomes and to have diverse experiences at the same time. To support the decision model, some economic theories and Moore law are used. To verify the proposed model, a Telecommunication Company is considered as a case study for its 6-year plan of investment. The simulation results of conducted scenarios for the mentioned mid-scale case study prove that it is logical to establish on-premises a private datacenter and utilising the hybrid deployment once it encounters abrupt burst of resource demand. Altogether, the proposed holistic model can be customised for different users with different scales.

Fragmenting work: Theoretical contributions and insights for a future of work research and policy agenda

AbstractMick Marchington's highly innovative research and writings on ‘Fragmenting Work’ have transformed our understanding of organisations, human resource management (HRM) and the world of work. He led a series of in‐depth case studies of networked organisations—including airport operations, supply chains, multi‐client call centres, public‐private partnerships and information technology outsourcing—and argued for the significance of inter‐organisational networks in directly informing HRM theory and also shaping HRM practice. The resulting highly cited body of published work captured and further developed Mick's intellectual interests in pluralism and complexity in relation to HRM theory. In this article, we reflect on Mick's theoretical contributions and also consider how core theoretical insights derived from the Fragmenting Work research programme can be applied to new questions about the future of work concerning digital platforms, career ladders and global supply chains.

Risk evaluation of information technology outsourcing project: An integrated approach considering risk interactions and hierarchies

Effective risk evaluation is necessary to guarantee the successful completion of an IT outsourcing (ITO) process. However, previous methods of ITO risk assessment omit the interrelationships between the risk factors and ignore the vagueness of the evaluations. Additionally, most of the approaches fail to show the complex interactions among the risk factors with an intuitive and clear structure diagram. Thus, a new method for ITO risk assessment and visualization is developed in this paper. The proposed method integrates the advantages of improved decision-making and trial evaluation laboratories (DEMATEL) method, to incorporate the vagueness of the evaluations flexibly and evaluate the interactions and internal strengths of risk factors, and the merits of interpretative structural modeling (ISM), to clarify the risk factor structure. To illustrate the practicality and validity of this approach, an ITO case study of a mineral company is used in the implementation section to demonstrate the method.

A Continuous Dispatch Decision Model for Sustainable IT Service Assignments

Information technology (IT) services are indispensable in the enterprises' sustainability program nowadays. For the outsourcing of IT services, many companies use the contract service model and set up a project to implement timely IT requests which constantly arrive at different IT sites. The demand for outsourced IT services and related workforce coordination is a permanent decisional process, yet existing studies mainly focus on the one-time assignment or the centralized service model. Hence, this paper bases on the multi-period and multi-service allocation requirement to develop a sustainable assignment model. The model handles continuous service requests and decentralized worker assignments to optimize overall costs under the fixed-price contract type of IT service. A real industrial service case is reported to illustrate the model. A comparative review with related works is also provided to discuss the contributions of the model and to outline its future research and development.

How does the power dynamics in the information technology outsourcing supply chain influence supplier's talent retention: a multiple case study

PurposeThe purpose of this paper is to investigate how the power dynamics between the client firm and the supplier firm in the information technology outsourcing (ITO) supplier chain influence the supplier firm's human resource management (HRM) practices, particularly talent retention.Design/methodology/approachA multi-case study approach was adopted comprising four supplier firms, three client firms and a total of 53 interviews. The transaction cost economics (TCE) is the theoretical lens that guides the interpretation of our findings.FindingsThe power dynamics between client and supplier firms in the ITO supply chain is one underpinned by TCE theory, characterised by an asymmetric client-dominated, transactional relationship, with the client firms controlling the “why”, the “what”, and the “how” dimensions of their collaboration. This “three-dimensional control” led to high talent turnover in supplier firms, which boomerangs to perpetuate the power dynamic, forming “vicious cycles of talent turnover” in the ITO supplier chain. Originality/valueNo previous study has analysed power dynamics as an external factor on ITO supplier firms' talent retention. The construct of the “three-dimensional-control” offers a framework to study power dynamics in the ITO supplier chain. The study’s framework of the “vicious cycles of talent turnover” is the first that explains the mechanisms through which the power dynamics in the ITO influences supplier's talent retention.