A Review of the it Outsourcing Empirical Literature and Future Research Directions

Abstract

An enormous amount of information has been produced about the IT outsourcing phenomenon over the last 20 years, but one has to look to the academic literature for consistent, objective, and reliable research approaches and analyses. Our review finds that, In practice, the academic literature on IT outsourcing has very much honored both rigor and relevance In the ways In which research has been conducted. Our central purpose In the review was to answer two research questions: What has the empirical academic literature found about information technology outsourcing (ITO) decisions and outcomes? What are the gaps In knowledge to consider In future ITO research? To answer these questions, we examined 164 empirical ITO articles published between 1992 and 2010 In 50 journals. Adapting a method used by Jeyaraj et al. (2006), we encapsulated this vast empirical literature on ITO In a way that was concise, meaningful, and helpful to researchers. We coded 36 dependent variables, 138 independent variables, and 741 relationships between Independent and dependent variables. By extracting the best evidence, we developed two models of outsourcing: one model addressed ITO decisions and one model addressed ITO outcomes. The model of ITO decisions includes Independent variables associated with motives to outsource, transaction attributes, client firm characteristics, and influence sources. The model of ITO outcomes includes Independent variables associated with client and supplier capabilities, relationship characteristics, contractual governance, decision characteristics, and transaction attributes. We also examined the interactions among broad categories of variables and the learning curve effects resulting from feedback loops. Overall, ITO researchers have a broad and deep understanding of ITO. However, the field continues to evolve as clients and suppliers on every inhabited continent participate actively in the global sourcing community. There is still much research yet to be done. We reviewed recent studies that have identified gaps in current knowledge and proposed future paths of research pertaining to strategic motivations, environmental influences, dynamic interactions, configurational and portfolio approaches, global destinations, emerging models, reference theory extension, and grounded theory development.

Strategic innovation through outsourcing: The role of relational and contractual governance

“…Past studies, however, have persistently anticipated that outsourcing will deliver new ideas and value to both business operations and strategic objectives (Lacity and Hirschheim 1993;Lacity et al 2010). Despite the above risk, innovation is one of the potential promises of outsourcing; however, one which is poorly understood.…”

“…Relational governance will be examined in this study as the quality of the client and supplier relationships (Lacity et al 2010), while contractual governance will be explored through three contract types commonly used in outsourcing engagements: fixed-price, time and materials (Gopal et al 2003;Gefen et al 2008) and partnership-based (Willcocks and Choi 1995;Dibbern et al 2004), and the combinations of these contract types. This research relies on a pan-European cross-industry survey that included representatives of 248 firms that are buyers of IT and business process outsourcing services.…”

IT Outsourcing—A Source of Innovation? Microeconometric Evidence for Germany

“…As summarised by Lacity et al (2010), the most important motive for ITO is "the desire to reduce cost on a non-core IT activity better provided by suppliers with superior skills, expertise, and technical capabilities".…”

“…The determinants of ITO are well studied, most of the studies belonging to the information systems literature. The most recent and comprehensive review of this literature is provided by Lacity et al (2010). They reviewed 164 empirical -quantitative and qualitative -articles and coded their findings.…”

“…According to Lacity et al (2010) the most important motive for information technology outsourcing (ITO) is "the desire to reduce cost on a non-core IT activity better provided by suppliers with superior skills, expertise, and technical capabilities". As regards the outcome of ITO empirical results are less concise, however with a major proportion of studies showing evidence for positive outcomes.…”