Journal of Information Technology

Critics have argued that the field of information systems (IS) lacks a coherent theoretical framework. This paper attempts to further the theoretical development of a critical and pervasive contemporary phenomenon, outsourcing of IS functions, by synthesizing four theoretical models (resource-based theory, resource-dependence theory, transaction cost theory and agency theory) that are useful for understanding determinants of a firm's outsourcing strategy. From these theoretical models, a contingency model of outsourcing is developed which can be used to direct empirical research.

The structure of the decision faced by a firm to outsource or to retain information services is developed in this paper. Theory regarding the decision structure is discussed and the results of in-depth interviews with a variety of chief information officers presented. Specifically, the forces that drive the outsourcing decision are identified, the incentives and disincentives of outsourcing relationships being addressed in detail. A framework for contemplating the outsourcing option is presented, followed by recommendations on managing relationships with outsourcing vendors.

This paper views information technology (IT) outsourcing decisions as classical make-or-buy decisions. In essence, these decisions consist of finding an acceptable balance between benefits and risks. The principal contribution of this paper is the development of a model that describes the relationship between outsourcing benefits and risks. It draws on work from two streams of research: transaction cost theory and modern financial theory. The model can assist managers in determining whether outsourcing or in sourcing is a better choice for a particular IT function and in evaluating and comparing competing vendor proposals. The model can also serve as a framework for future research in IT governance issues.

The I/S literature reflects an increased interest in outsourcing and partnerships with vendor firms. This paper selects a model of partnership development from the management literature and applies it to I/S partnering. The emphasis is on the manageable aspects of partnership development and the actions that I/S managers can take to speed partnership development and deepen relationships with vendors. Two case studies of I/S partnership development are used to test and illustrate the concepts developed from the model of partnering behaviour.

The theory and background of outsourcing are examined from a general perspective. It is concluded that the pressures to outsource activities can best be understood through two main sources: the work of organization theorists on the management of organizational complexity and the transaction economics approach of Williamson which argues the virtues of provision of many organizational services through market mechanisms rather than by internal departments. Within IT, the early motivation for outsourcing was the cost reduction one implied by the Williamson approach. However, a number of authors have argued that the complexity of managing IT outsourcing means that it is often preferable to try to improve the efficiency of internal suppliers. This suggests that there is a need to develop a framework that will enable a decision to be made about what to outsource and what to insource. A model is applied to the IT sourcing decision.

With increasing cost-reduction pressures, outsourcing – selectively turning over some information systems functions and processing services to a subcontractor – has emerged in the last few years as an important option for chief information officers (CIOs). In this paper we present the results of our exploratory, empirical research into the practices and views of IS outsourcing. The research methodology of a questionnaire-based mail survey was used. The survey sample consisted of companies that were identified as the most effective users of IS by Computerworld magazine. The paper provides empirical evidence on the extent to which outsourcing of various IS functions is being practised, and the views of CIOs concerning the advantages, disadvantages and motives of IS outsourcing. The paper also sheds light on the relationship between various firm characteristics and IS outsourcing, and investigates the economics of, and decision-making processes in, IS outsourcing. There is a special focus on the comparison of USA-based and global IS outsourcing.

This paper reports on research into information systems (IS) outsourcing decisions and their consequences. A descriptional framework was used to describe systematically different types of outsourcing. A theoretical foundation for the IS outsourcing decision was derived from established organizational theories. These findings were investigated by retrospective and longitudinal in-depth case study research into 23 IS outsourcing arrangements in six organizations. The case studies were performed in the Netherlands, and comprised systematic analysis of actual short and long term effects of IS outsourcing.

Information Systems (IS) functions and whole IS departments are being outsourced in industries where the IS functions have been considered ‘core’ to the success of that business. Why and how senior management came to make these decisions is the focus of this article. It explains the motivations behind Information Technology (IT) outsourcing when popular alliance theories, such as transaction cost theories, game theory and joint-venture alliance theory suggested firms would not outsource an entity if core competency would be lost. Seven case studies were used to investigate the IT outsourcing phenomenon in the observed ‘alliance-like’ relationships emerging in the banking industry in the early 1990s. Inductive theory generating research was undertaken in this work following Yin's (1984, 1989) guidelines of multiple case replications to ensure rigorous and systematic data collection procedures. Before the case studies were conducted, 40 preliminary interviews were undertaken with managers of companies that were and were not involved in IT outsourcing contracts to explore the theorized factors of interest drawn from the literature, to develop the propositions, and to refine a structured interview guide. These preparatory steps led into the initial case study, and the literal replications of the proposed factors to confirm the patterns found. A theoretical replication based on conflict resolution was then undertaken to expose greater variation in conflict with the outsourcing relationships to contrast the initial patterns found. The results suggest that financial motivations underlie many IT outsourcing decisions, and unresponsive IS departments are accelerating the pace of the outsourcing process. Within this research, IT outsourcing was found to have profound effects on the expenses for the banks. However, contrary to conventional wisdom, IT outsourcing is taking place within firms and industries which utilize IS activities that are considered core competencies. Several strategic motivations were presented that may explain this management decision. Firms were undertaking IT outsourcing to change the organizational boundaries, to restructure, to mitigate technological risk and uncertainty, to access emerging technology, to manage the IS department better, and to link business and IT strategy.