Managing Complex IT Outsourcing--Partnerships

This article discusses the management of complex IToutsourcing partnerships from the perspective of both outsourcing companies and IT-suppliers. The research project included 24 interviews with business and ITexecutives of outsourcing companies, executives of ITsuppliers and experts. This article aims to provide a better understanding of managing complex IToutsourcing partnerships by proposing a descriptive framework containing relevant governance factors. The investigated cases and expert interviews and IT outsourcing literature are used to evaluate the framework. The results of the analysis and the framework itself illustrate the various complex issues arising in managing of complex IT outsourcing -partnerships. 1. Problem Specification The question how large organizations manage and cope with the complexity from global business operations and IT infrastructures remains one of the most pressing issues facing management [1][4]. Most of the literature about how to organize IT focussed on choices between centralization, decentralization and federal models. More recently Sambmurthy and Zmud focused on coordination, by introducing the issues of relational architectures and integration architectures as building blocks for the Organizing Logic for IT activities [1]. The problem is pertinent when IT and it’s department form a legal part of the (business-) organization, it is even more complex when IT is largely outsourced to one or more IT services suppliers. 0-7695-1435-9/02 $ h Annual Hawaii International Conference on System Sciences (HICSS-35’02) .00 © 2002 IEEE This paper describes a study on management practices for managing complex IT outsourcing partnership relationships in European-based companies with global and pan-European operations. Management attention for IT-outsourcing partnership is becoming more and more important because many companies have decided to outsource their IT-services to external IT-suppliers. The relative proportion of the global total IT-spend outsourced is growing fast. International Data Corporation expects for 2002 a growth of 10% in the global IT-outsourcing market of 142,2 billion US $ [10]. Most of the research on outsourcing until today has focussed on the feasibility of IT-outsourcing [12][14] [15]. The research attention for the management of complex IT-outsourcing partnerships has been limited up till now. In this paper we propose a conceptual model which contains governance factors applicable to IT outsourcing partnerships. The model is rooted in organization design theory; and comparative case study analysis in multi national European based firms provides support. With the study we aim at developing a better understanding of the management issues that surrounds the development of complex IT-outsourcing partnerships in general, form both the outsourcing company’s and IT services supplier’s perspective. The structure of the paper is as follows. In section 2 the descriptive framework is developed. Section 3 discusses the characteristics of the investigated cases and the profiles of the experts who have been interviewed. In section 4 cases and expert opinions are analyzed based on the proposed framework, and propositions are developed. Conclusions are discussed in section 5. 17.00 (c) 2002 IEEE 1 Proceedings of the 35th Hawaii International Conference on System Sciences 2002