Revealing hidden motives behind outsourcing decisions: a case study relating to public information technology services

Jesse Seppälä, Kalevi Kyläheiko and Ari Jantunen

International Journal of Procurement Management, 2014, vol. 7, issue 5, 520-542

Abstract: We examine outsourcing of IT services within the Finnish public sector. The goal is to construct a flexible framework that reveals the hidden motives of buyers and sellers when there are no real competitive outsourcing markets. Since outsourcing decisions boil down to the full costs minimisation of purchasing, we will start from the transaction cost analysis (TCA). This static model is, however, too limited when trying to evaluate the costs and benefits of the real world outsourcing. Therefore, we extend TCA taking into account also transaction benefits. Then, we outline the impact of an outsourcing decision as an empirical case study where the transaction-related (dis)advantages are systematically analysed based on questionnaires. The managerial lesson is that the hidden motives of buyers and sellers are different and it is of importance to recognise the differences.

Keywords: outsourcing; public procurement; transaction costs; governance choice; transaction cost analysis; TCA; Finland; public sector; information technology; IT services; buyer-seller relationships; motivation. (search for similar items in EconPapers)
Date: 2014
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