Is There an “Information Technology Outsourcing Paradox”?

Rouse, Anne C.

doi:10.1007/978-3-540-88851-2_6

Cited by 8 publications

(6 citation statements)

References 24 publications

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“…Based on case study research, Rouse (2009) concludes that this is mainly due to myopic management and opportunism. Similarly, Overby (2010) argues that innovation is expected but often not properly defined, and sometimes not recognized because traditional business metrics fail to properly measure innovation outcomes.…”

Section: Background Discussionmentioning

confidence: 99%

“…An IT outsourcing paradox persists in the literature: While a number of large scale firm-and industry-level studies find positive impacts on productivity in the short run (Ohnemus, 2007;Knittel and Stango, 2008;Han et al, forthcoming), client organizations often report to be dissatisfied in terms of long run strategic goals such as innovation (Miozzo and Grimshaw, 2005;Overby, 2007Overby, , 2010Bacheldor, 2010). Evidence from case-study research and insights from simulation models suggests that this is due to myopic management and opportunistic vendor behavior (Barthélemy, 2001;Rouse, 2009;Windrum et al, 2009). In contrast, there is a substantial body of work showing that firms benefit from linkages with related types of knowledge-intensive business services (KIBS) (Bessant and Rush, 1995;Antonelli, 1998;Muller and Zenker, 2001;Czarnitzki and Spielkamp, 2003;Howells, 2006;Tether and Tajar, 2008;Huang and Yu, 2011;Görg and Hanley, 2011).…”

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External Technology Supply and Client-Side Innovation

Peukert

2011

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp11082.pdf Non-Technical SummaryDynamic market environments and consumer preferences demand firms to assure a high degree of flexibility. At the same time, competitive pressure from globalized markets leads to constantly raising efficiency requirements. Organizations change their design from static to dynamic concepts in order to react adequately to these developments and challenges. A common strategy is to reach beyond the boundaries of the firm to access critical resources.Accordingly, we observe that technology transfer from providers of knowledge intensive business services attracts more and more attention.A specific case is the external supply of information technology. A major reason why firms outsource IT, is the potential to cut cost. We argue that there is also a potential of knowledge transfer in IT outsourcing relationships, leading to client-side innovation. The aim of this paper is to contribute to resolving an empirical puzzle arising from the prior literature. Some authors find beneficial effects of IT outsourcing, others underline that firms often fail to achieve their expected strategic goals.Our stylized theoretical model combines a knowledge production function framework and transaction cost economics. We hypothesize that the right balance between internal and external knowledge is critical for innovation. The empirical application is German AbstractFlexibility in response to competitive pressure from globalized markets and increasingly individualized customer desires has become vital for firms. A common strategy to address this challenge is to employ a dynamic concept of organization and reach beyond the boundaries of the firm. Accordingly, technology transfer from providers of knowledge intensive business services attracts more and more attention. In this context we focus on external supply of information technology and client-side innovation. The aim of this paper is to contribute to resolving an empirical puzzle arising from the prior literature. Some authors find beneficial effects of IT outsourcing, others underline that firms often fail to achieve expected strategic goals. Our stylized theoretical model combines a knowledge production function framework and transaction cost economics. We hypothesize that the right balance between internal and external knowledge is critical for innovation. The empirical application is German firm-level data covering...

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Section: Background Discussionmentioning

confidence: 99%

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confidence: 99%

External Technology Supply and Client-Side Innovation

Peukert

2011

SSRN Journal

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“…This BPO success model draws upon concepts proposed by Rouse (2007) for cost savings, technical services quality and strategic issues, and incorporates the dimension of user satisfaction judged relative to expectations proposed by Seddon et al (2002). It is also consistent in high level terms with a 25‐point conceptual framework for ITO success (Cullen et al , 2008), the high level parameters of which are defined as financial, operational and strategic.…”

Section: Offshore Business Process Outsourcing: Literature Reviewmentioning

confidence: 93%

Offshore BPO at large captive operations in India

Penter

Pervan

Wreford

2009

Information Technology &Amp; People

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Purpose-The motivation for this research is to contribute towards development of a management framework for offshore Business Process Outsourcing (BPO). Design/methodology/approach-This paper utilises longitudinal case studies to identify success factors in managing offshore Business Process Outsourcing (BPO) via the captive model (i.e. wholly-owned subsidiary). Findings-Success in offshore BPO is based on a combination of cost savings, technical service quality and strategic issues, is specific to business context and will change over time. Choice of engagement model (e.g. captive operation or armslength contracting) is an important success factor. Advantages of captive centers arise from higher levels of relationship quality, trust and collaboration effectiveness. Research limitations/implications-Focused on two global companies in two industry sectors (airlines and telecommunications), and both have adopted one particular BPO model (i.e. captive operation). Originality/value-The paper contributes to scarce literature on offshore captive BPO operations, the most common but also least researched engagement model. The findings have practical implications for managers designing offshore BPO strategy.

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“…However, despite this widespread adoption there are performance issues, dissatisfaction and an apparent dichotomy as to why outsourcing is so prevalent, yet lacks empirical justification, and remains a largely unexplored puzzle (Jiang et al, 2006, Rouse, 2007. In this regard, outsourcing as a process, shares similar sub-optimal outcomes with other large scale changes, inter alias: Business Process Engineering (Holland and Kumar, 1995), Merger and Acquisitions (Cartwright and Cooper, 1993), the chronic problems of ERP implementations (Scarbrough et al, 2008) and even major failings in large scale project implementations (Bronte-Stewart, 2009).…”

Section: Introductionmentioning

confidence: 99%

“…Where outcomes are reported most consist of predictions or are desires to reduce cost (Lacity et al, 2010), are derived from expectations, and not on any grounded analysis (Rouse, 2007). Alsudairi and Dwivedi (2010), in reviewing the outsourcing literature showed the dearth of research into environmental/contextual issues, whilst Busi and McIvor (2008) observed that there are key gaps in understanding and a need for more action research, processual and longitudinal studies focused on those processes and implementation practices underpinning success.…”

Section: Introductionmentioning

confidence: 99%

Strong contracts: the relationship between power and action

Morgan

Doran

Morgan

2018

IJOPM

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Strong contracts: the relationship between power and action AbstractPurpose -There is a view that strong preventative contracts are essential to control supplier opportunism and delivery during an outsourcing implementation. This paper tests the proposition that contractual environments, typical of outsourcing engagements, are essentially conflictual and that context and circumstance can act to overwhelm formal contractual and project control and lead to poor outcomes.Design/methodology/approach -The paper reports on a supply case study focused on the outsourced delivery of an application development in the defence sector. Data was gathered by a participant observation in situ for a period of three years. A grounded analysis from observations, diaries, semi-structured interviews, focus groups, documentary analysis, and emails was carried out with six case organisations within the extended supply chain.Findings -Collaboration between suppliers and buyers can be blocked by preventative fixed price contracts and as a result when requirements are incomplete or vague this adversely impacts success. Implications for practiceStrong contractual control focused on compliance may actually impede the potential success of outsourcing contracts especially when collaborative approaches are needed to cope with variability in demand. Originality/valueThe research raises the important practical and conceptual notion that an outsourcing can be a conflictual inter-firm phenomenon, especially where multiple actors are involved and business uncertainty is present.

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Is There an “Information Technology Outsourcing Paradox”?

Cited by 8 publications

References 24 publications

External Technology Supply and Client-Side Innovation

External Technology Supply and Client-Side Innovation

Offshore BPO at large captive operations in India

Strong contracts: the relationship between power and action

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