IT outsourcing and firm-level performance: A transaction cost perspective

We analyzed the effect of the level of low asset specificity IT outsourcing on firm-level financial performance. We used transaction cost economics (TCE) as the theoretical basis to explain the effect of the level of network and telecommunication services outsourced on financial performance. An analysis of 1444 Integrated Healthcare Delivery Systems revealed that higher levels of network and telecommunication services outsourced were associated with superior financial performance. Specifically, each additional network and telecommunication service outsourced resulted in an average $3,120,000 in savings, a 25% increase in profit. In addition, increases in IT budgetary expenditures were found to be associated with increased financial performance. Our study provided preliminary support for the use of asset specificity to guide outsourcing decisions. In particular, IT activities that have become commodities (having ‘low specificity’) should be outsourced to improve the firm's financial performance.     

Explaining IT governance disclosure through the constructs of IT governance maturity and IT strategic role

This study investigates the relation between the maturity of IT governance processes and the IT governance disclosure of firms. Furthermore, it examines whether the strategic role of IT in an industry induces systematic variation in IT governance disclosure. Based on a content analysis of annual reports and a field survey on the maturity of the implementation of COBIT processes, the results demonstrate a role of IT governance frameworks in stimulating accountability and transparency via enhanced external reporting of relevant IT information to external stakeholders, in particular in settings where the strategic role of IT is high.     

A probabilistic model for optimal insurance contracts against security risks and privacy violation in IT outsourcing environments

Day by day the provision of information technology goods and services becomes noticeably expensive. This is mainly due to the high labor cost for the service providers, resulting from the need to cover a vast variety of application domains and at the same time to improve or/and enhance the services offered in accordance to the requirements set by the competition. A business model that could ease the problem is the development or/and provision of the service by an external contractor on behalf of the service provider; known as Information Technology Outsourcing. However, outsourcing a service may have the side effect of transferring personal or/and sensitive data from the outsourcing company to the external contractor. Therefore the outsourcing company faces the risk of a contractor who does not adequately protect the data, resulting to their non-deliberate disclosure or modification, or of a contractor that acts maliciously in the sense that she causes a security incident for making profit out of it. Whatever the case, the outsourcing company is legally responsible for the misuse of personal data or/and the violation of an individual’s privacy. In this paper we demonstrate how companies adopting the outsourcing model can protect the personal data and privacy of their customers through an insurance contract. Moreover a probabilistic model for optimising, in terms of the premium and compensation amounts, the insurance contract is presented.     

Social IT outsourcing and development: theorising the linkage

In recent years, a growing number of social enterprises have focused their attention on harnessing the benefits of trade in software by involving underprivileged communities from developing countries in the production of information technology (IT). The goal of this type of activity, known as social IT outsourcing, is not only to provide employment and income to low‐income individuals but also to address wider development priorities within the locality. This paper focuses on strengthening our understanding of social IT outsourcing as a promoter of development. Based on research in Jharkhand, eastern India, we seek to understand how social IT outsourcing activity is interpreted from the perspective of employees who provide data services for the market and from the perspective of the social enterprise that balances its market orientation with its social development goals. Our findings generate new insights into the mechanisms at play through which social IT outsourcing is able to provide a variety of developmental advantages to rural poor communities leading to policy implications for governments and development agencies.     

The moderating role of IT-business alignment in the relationship between IT governance,IT competence,and innovation

Results from a survey of senior executives/officers in charge of IT suggest that while greater IT governance triggers more innovation, IT-business alignment does not moderate this relationship. Executive management IT competence has a direct and positive impact on innovation, and this relationship is stronger when moderated by IT-business alignment. However, regardless of IT-business alignment, innovation is not significantly affected by the board’s IT competence but is positively impacted by IT intensity. This study extends the IS literature on the role of IT in innovation and contributes to the IT governance literature.     

Strategic dependence on the IT resource and outsourcing: A test of the strategic control model

Using resource dependency theory (RDT), this research analyzes how organizations control their information technology resources to improve organizational performance. According to RDT, organizations must manage their dependency on external organizations and limit external dependencies when resources are considered critical. The current study proposes and tests a portion of a Strategic Control Model positing that managers seek to control important, strategic resources in order to create value for the firm and to avoid dependency on external entities. Utilizing a research design that captured extensive quantitative data on the control of IT functions and services, the research team gathered 5 years of data on 54 business units (BUs) in 27 global companies located in seven countries. Study examined the linkages of these 54 BUs to firm performance. Locating the Extent of Control within the firm in cases where the firm depends on IT as a strategic resource proves to be a good explanation for effective decisions leading to higher performance. Viewing IT as a strategic resource alone does not lead to positive business unit outcomes, but the moderating influence of Extent of Control is found to establish the complex statistical relationship with business unit performance. For these reasons, it is critical that a theoretically grounded firm-wide process for decisions on locating IT control is in place to capture business value.

IT outsourcing: frameworks for conceptualizing practice and perception

This paper seeks to conceptualize theory and practice of information technology (IT)‐based outsourcing. It uses four conceptual frameworks in this respect – core competencies, transaction cost economics, agency theory and partnership – in an empirical comparison of IT outsourcing in the public and private sectors within the UK. The qualitative research methodology involved interviews with IT managers in both sectors and documentary analysis of outsourcing vendors’ literature. The findings suggest that practices and perceptions of IT outsourcing found in the two sectors support the basic principles of some frameworks more than others, e.g. core competencies, transaction cost economics and agency theory are well developed with partnerships less so. However, using all four frameworks improves understanding of multifaceted strategic practice in fundamentally different types of organization and helps to expose some issues which have not emerged in previous outsourcing studies.     

The mediating role of psychological contract breach in IS outsourcing: inter-firm governance perspective

A substantial body of previous research on the client–vendor relationship has identified inter-organizational partnerships and formal contracts as important governance mechanisms for outsourcing performance. Successful IS development through outsourcing, however, may be more dependent on the people who execute the project in the field than on inter-firm relationships and agreed-upon formalities. Among individual-level variables, the special importance of psychological contracts has recently been noted in IS literature. This study investigates the mediating role of psychological contract breach between these two firm-level governance factors and outsourcing performance. By analyzing matched responses from project managers, vendor participants, and system users, we found that the effects of explicit legal contracts and partnership quality on outsourcing outcome are fully mediated by the client's perception of breach by the vendor. This study offers an extended theoretical perspective on the governance of firm-level collaboration, especially revealing that the benefits of formal contracts and inter-organizational partnerships eventually translate into satisfactory outsourcing outcomes for system users through each party's perception of breach on the individual level. Moreover, discrepancy was observed in this study between the client and vendor regarding the impact of legal contracts on individuals’ psychological contract while that of partnership was prominent in both sides.     

An investigation of factors that influence the duration of IT outsourcing relationships

Past studies in the IT outsourcing area have examined the management of IT outsourcing relationships from a variety of perspectives. The present paper extends this line of research. In this study, we take a multi-theoretic perspective to explore factors that determine the duration of continuing IT outsourcing relationships between vendor and client firms. Five ex-ante and two ex-post factors that may influence relationship duration were examined in this study. Data for this study were collected using a nationwide survey. To investigate the dynamics of continuing outsourcing relationships through repetitive contracts, we performed survival analysis using an accelerated failure-time (AFT) model. Four factors are found to have a significant relationship with relationship duration as hypothesized. However, three factors, of which two are ex-post factors, are found to not have a significant impact on outsourcing relationship duration. Implications and contributions of the study are discussed.     

Exploring information technology outsourcing relationships: theory and practice

A growing concern among the organisations who are actively involved in Information Technology outsourcing is post-contract management and the ensuing development of what many practitioners and scholars have coined the ‘outsourcing partnership’. This paper integrates theoretical concepts from organisation theory, social exchange theory, and relational contract theory with existing research on IT outsourcing, to develop a conceptual model for understanding the relationship. In particular, we conceptually elaborate and then address the relationship's properties — identified as interactions, contract, context, structure, and behavioural dimensions. Preliminary exploratory research into relationship practice in twelve organisations involved in outsourcing presents some interesting findings that advance the thinking about the outsourcing relationship. We found the conceptual model useful in elucidating important relationship management areas, highlighting not only the outsourcing relationship's contractual, social, and economic characteristics, but also many additional elements found to have relevance in practice.     

云计算背景下企业IT 决策机制框架

云计算的不同应用水平会在不同程度影响企业的IT决策,相应的IT决策机制也会随之发生变化．本文深入分析了云计算的三层服务模式对IT决策的影响,由此提出了基于云计算背景的IT决策机制框架．并通过国外成功实施云计算的企业案例分析并验证本文得出的IT决策机制框架．本文不仅对以往的IT决策机制框架的基础上加入了IT服务模式维度,同时也为云计算在企业中的应用提供了制度框架．     

Assessment of IT governance in organizations: A simple integrated approach

There are various methods available for dealing with IT governance. These methods are diversified, and in some cases lengthy and complicated. This paper is concerned with providing a unified simple approach for IT governance assessment. The approach is developed and tested through the following three main steps: (1) highlighting the basic requirements of IT governance considering key available methods; (2) designing the target approach that integrates these requirements and uses knowledge management principles; and (3) illustrating the use of the approach through a typical illustrative application. The approach uses the “STOPE: Strategy, Technology, Organization, People and Environment” view to integrate the issues involved, the knowledge management principles as an added value, and the six-sigma phases as a cyclic improvement process. The work provides “fifty” main IT governance controls; and these enable finding key strengths and weaknesses of IT governance in organizations from which development directions can be derived. It should be noted that considering knowledge management, and people as a main domain in the integration view, illustrate special emphasis of the human factor in IT governance.     

Exploring complexity and contradiction in information technology outsourcing: A set-theoretical approach

Effectively managing Information Technology outsourcing (ITO) requires integration of conceptually distinct and sometimes contradicting factors. For instance, ITO “best practices” for cost reduction can inhibit a firm’s innovativeness. To address these challenges, we build on governance and capability perspectives and employ a set-theoretic approach to examine ITO practices in 27 firms. Our exploratory study reveals four distinct ITO configurations, of which three lead to positive outcomes and one leads to negated-outcomes. Detailed contracts appear to be a necessary condition for cost reduction but can also be an impediment to strategic innovation; and firms can consider a “best-of-breed” strategy to overcome this tension. Our findings call for more attention to both transaction-based and portfolio-based governance to enable flexibility for innovation while retaining rigor and risk mitigation for cost reduction.     

Risk assessment in IT outsourcing using fuzzy decision-making approach: An Indian perspective

Outsourcing of Information Technology (IT) is a common practice in global business today. IT Outsourcing (ITO) refers to the contracting out of IT services (or functions) with the objective of achieving strategic advantages as well as cost benefits. Recently, many IT industries are facing daunting challenges in terms of healthy alliances on their ITO strategy due to existence of inherent risks. These risks must be recognized and properly managed towards successful establishment of effective ITO strategy. Therefore, risk assessment appears to be an important contributor to the success of an ITO venture. In this paper, a hierarchical ITO risk structure representation has been explored to develop a formal model for qualitative risk assessment. The basic parameters for defining risks have been presented including the metrics for measuring likelihood and impact that aid to achieve consistent assessment. An improved decision making method using fuzzy set theory has been attempted for converting linguistic data into numeric risk ratings. In this study, the concept of ‘Incentre of centroids method’ for generalized trapezoidal fuzzy numbers has been used to quantify the ‘degree of risk’ in terms of crisp ratings. Finally, a framework for categorizing different risk factors has been proposed on the basis of distinguished ranges of risk ratings (crisp). Consequently, an action requirement plan has been suggested for providing guidelines for the managers to successfully manage the risk in the context of ITO exercise.     

基于eSCM-SP的IT外包服务商能力度量与改进

本文首先分析了IT外包的现状、理论渊源以及开发新模型的必要性;接着介绍了eSCM-SP模型的三维体系结构;最后基于该模型,提出了IT外包服务商如何改进与度量服务能力.     

The role of IT human capability in the knowledge transfer process in IT outsourcing context

Our research attempted to identify the behavioral process of knowledge transfer by examining the effects of IT human capability, human character, trust, and cooperative learning on it in an IT outsourcing situation. By analysing data collected from vendor and client matched-pair samples of 87 IT outsourcing projects, we found that both the client's and the vendor's character influenced trust, trust affects on cooperative learning, and the cooperative learning influence on knowledge transfer. More importantly, it we found that the client's IT human capability had a direct impact on cooperative learning and knowledge transfer. This indicated that client's IT human capability was a crucial factor in effective knowledge transfer during IT outsourcing. It also implied that client firms should identify and retain some IT personnel who can apply vendors’ competencies in IT practice and respond effectively to any technological challenges.     

Outsourcing success in the eye of the beholder: Examining the impact of expectation confirmation theory on IT outsourcing

Expectations have been found to exert a significant impact on client satisfaction in outsourcing projects and have been utilized to understand how individuals accumulate experiences and develop beliefs. In this study, we examine the impact of expectations on IT outsourcing success. Although extant studies identify multiple potential expectations, the expectations construct is often viewed as unidimensional with expectations examined at a general level. Furthermore, our multidisciplinary literature review indicates a gap in the literature regarding which expectations to employ. We therefore draw upon the Expectation Confirmation Theory (ECT) to determine a parsimonious set of expectations that combine to influence outsourcing success. Through an international survey of chief information officers (CIOs) and other senior IT outsourcing practitioners, we demonstrate the impact of expectations on IT outsourcing success. Moreover, we evidence that the should, minimally acceptable, and intolerable expectations can be used to predict outsourcing success. This study contributes to the outsourcing literature, specifically, and the multidisciplinary ECT literature, generally, by evaluating the multi-faceted nature of expectations. The results have practical implications for clients and vendors engaged in IT outsourcing and those who engage in expectation management.     

IT治理决策中业务应用需求的分析与应用

在深入剖析了业务应用需求的主要研究内容的基础上,以CSF思想为指导,提出一种业务应用需求中关注的企业核心流程需求的识别方法,给出一种确定重构业务流程的方法和理论,可以作为在实施IT治理中业务应用需求分析的参考。并在此基础上,将此方法应用于中海集团的IT治理决策中,得出中海集团的核心业务流程。     

IT outsourcing in insurance services: risk, creative contracting and business advantage

Abstract. Risks in IT outsourcing have received little systematic academic attention, despite growing evidence of wide disappointment and difficulty as well as some successes in outsourcing IT. This paper explores the 1993–98 case history of Polaris, a software intermediary in the European insurance sector. Despite the considerable risks inherent in outsourcing business-critical technology, Polaris was found to be achieving business advantage from such a strategy. This paper details 10 major risk areas in IT outsourcing distilled from previous research. It focuses on the sourcing, contractual and management choices made at Polaris. It assesses, against prior research findings, the degree to which these choices mitigated short- and long-term risk, and whether learning points flow from the analysis for other IT outsourcing arrangements.