From Telco to Techno: Outsourcing Transitioning in Information Systems

The global phenomenon of the IS/IT outsourcing continues to grow in importance. IS/IT outsourcing presents business challenges to both outsourcers and vendors alike. While the foundation of IS/IT outsourcing is ostensibly the transfer of financial and structural capital and vendor responsibilities, important issues remain about knowledge transfer and intellectual capital. Effective knowledge transfer and protection of intellectual capital relies on appropriate staff transition processes. However, little outsourcing research exists that focuses on individuals involved in such transitioning processes. Our research studied the processes and staff concerns during and following the transition of staff in a major strategic outsourcing case in which much of the IS function (particularly software development) was outsourced from a large telecommunications provider to a large technology company, both in Australia. Qualitative and quantitative methods were used to investigate the internal practices associated with merged IS functions. Findings concerning cultural and technical dimensions transitioning related to ‘psychological contract’ formation are presented. The findings inform outsourcing transitioning practice.