Outsourcing and Political Power: Bureaucrats, Consultants, Vendors and Public Information Technology

Abstract

The rapidly growing governmental IT outsourcing trend raises different questions: Who, inside bureaucracy, governs computer systems after outsourcing? Which actors gain or lose political clout when the govern ment begins to aggressively outsource its IT operations? How does IT outsourcing change the relationships among bureaucrats, consultants, and vendors? The article highlights the Increasingly important and behind-the-scenes role the consultant plays as an intermediary between the MIS bureaucrat and technological vendors. IT consultants exert an enormous amount of political power because they are the "glue" binding together all the actors Involved In producing and maintaining public information technology. Regrettably, this new consultant-centered envi ronment is responsible for the degradation of the organizational and technological skills of MIS bureaucrats and also impairs the feedback information flow between bureaucrats and vendors regarding the status of public computer projects. Therefore, the article suggests that the unchecked power of IT consultants hinders the ability of bureaucrats to be accountable for the systems they manage.N umerous corporations and governments followed Kodaks 1989 landmark decision to outsource its IT operations. 1 For example, the British Benefits Agency out sourced OpStart, its massive social welfare computerization project that was hailed at the end of the 1980s as the largest computer project in Europe. Britain also outsourced the buildup of the new Inland Internal Revenue Service computer system. 2 Likewise, New Zealand outsourced the construction of its new Air Traffic Control system, Chicago City Hall outsourced the computerization of its parking violations fee collection system, and Singapore outsourced the automation of its border crossing checkpoints system. Today, organi zations spend about 9% of their IT dollars via outsourcing channels and will outsource even more of their IT operations in the next several years. 3

Influences and outcomes of outsourcing: Insights from the telecommunications industry

“…In particular, it would be valuable to carry out in-depth case study analysis to understand more fully the relationship between and the relative emphasis of economic rationale and political behaviour in explaining outsourcing decisions. Furthermore, there has been a paucity of studies that have considered the influence of political behaviour on outsourcing decisions (Allen et al, 2002;Peled, 2001). …”

IT Outsourcing in the Public Sector: A Literature Analysis

“…Several Dutch public IT departments were privatized "regardless of the possible consequences" (De Looff 1995). Similar evidence comes from Australia (Gordon and Walsh 1997) and Israel (Peled 2001). Not surprisingly, the satisfaction from outsourcing arrangements is much higher in those organizations which made the decision to outsource independently, without a pressure from higher authorities (Edguer and Pervan 2004).…”

“…Overreliance on vendor's expertise and goodwill may result in loss of control over the technology and the current project status to the vendor or to a mediating consultant (Peled, 2001). Such loss of control is the most common IT0 risk for both businesses and public organizations.…”

Self-interest or the greater good

“…Although current outsourcing literature has acknowledged the influence of politics on outsourcing (Boardman and Hewitt, 2004;Mantel et al, 2006;Peled, 2001) and has uncovered how organisational structure impacts the decision and contract development (Bidwell, 2012), this is the first study to deconstruct political goals into personal reputation, attainment, control and elimination. These goals had a common theme: the personal interest of the decision-maker.…”

“…However, these assumptions may be flawed (Beach and Mitchell, 1978;Nutt, 1984;Day and Lord, 1992), and it is increasingly recognised that reliance on these rational models provides an incomplete picture of the outsourcing process (McIvor, 2009). Unfortunately, research on non-rational aspects of supply management is relatively rare (Carter et al, 2007;Gao et al, 2005).Organisational politics are an important part of the outsourcing process (Bidwell, 2012;Peled, 2001). Indeed, outsourcing is often regarded as a political act as it directly impacts the power structures within the organisational hierarchy.…”