IT outsourcing: frameworks for conceptualizing practice and perception

Abstract

Abstract. 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.

Determinant Factors of Cloud-Sourcing Decisions: Reflecting on the IT Outsourcing Literature in the Era of Cloud Computing

“…Additionally, we encourage further research to provide inter-group comparisons, as extant research has already revealed various differences between investigated groups, such as adopters vs non-adopters Borgman et al, 2013;Lian et al, 2014), and differences among countries , industry sectors (Hancox and Hackney, 2000;Currie et al, 2004), and outsourced functions Dibbern and Heinzl, 2009). For instance, find noteworthy differences between the influences of benefits and risks for adopters vs nonadopters of SaaS.…”

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“…Reasons for outsourcing vary, and the conceptual frameworks (Grover et al, 1998;Elitzur & Wensley, 1998;Hancox & Hackney, 2000;Kern & Willcocks, 2000) which have been used to explain the practice and degree of success obtained include:…”

“…One problem for public sector outsourcing arrangements is the need for transparency and accountability, which makes partnership working difficult to reconcile with the apparent prohibition on becoming too cosy with the outside supplier. Closer relationships were easier when common cultures were shared in an internal market (Hancox & Hackney, 2000) Game theory Game theory has its origin in economics, and has been used, for example, to develop concepts such as the evolutionary stable strategy for a species (Smith, 1982). Game theory applied to outsourcing uses the idea that it may make sense for one party to cheat on the other, but whether this is a successful strategy in the longterm depends on the reaction of the client.…”

SOTIP as a Model for Outsourcing of Telecom Services for the Public Sector

“…[9] Many public sector organizations and local authorities, in particular, are doubtful about the degree to which vendors understood the "business" of local government. [9] It is particularly difficult to calculate and distinguish governance costs as…the public sector contract creation and monitoring are more difficult because of the sector's complexity and because there are costs associated with bureaucracy and democracy which are hard to allocate to specific functions. [9] In general, there are high "ex ante" transaction costs for the public sector as the whole process of procurement and outsourcing in particular is based on strict rules.…”

“…[9] It is particularly difficult to calculate and distinguish governance costs as…the public sector contract creation and monitoring are more difficult because of the sector's complexity and because there are costs associated with bureaucracy and democracy which are hard to allocate to specific functions. [9] In general, there are high "ex ante" transaction costs for the public sector as the whole process of procurement and outsourcing in particular is based on strict rules. A successful outsourcing should considerably reduce the "ex post" transaction costs.…”