Is There an “Information Technology Outsourcing Paradox”?

Anne C. Rouse ()
Additional contact information
Anne C. Rouse: Deakin University

A chapter in Information Systems Outsourcing, 2009, pp 129-146 from Springer

Abstract: This paper examines an apparent paradox: given the increasing adoption of outsourced IT service delivery, why has the academic literature been unable to confirm widespread satisfaction with the strategy? Instead it has come to be seen as almost axiomatic that outsourcing IT must be perceived as beneficial by purchaser firms — after all, why would organizations engage in this practice if it did not produce corporate benefits? Yet there is a growing body of evidence collected by both consultants and researchers that significant numbers of outsourcing arrangements are quite unsatisfactory (e.g., Aubert, Patry, & Rivard 1999; Bernard 2005; Gartner 2002; Ozanne 2000; Rouse & Corbitt 2003b). Trade and academic claims of a range of benefits have fuelled the worldwide adoption of IT outsourcing. Certainly, outsourcing has the potential for a number of benefits in addition to, and sometimes instead of, cost savings. These include enhanced business flexibility: access to skills; or to new or better technologies; increased capacity to concentrate on core business; enhanced managerial control; and financial restructuring benefits (such as converting capital to operating expenses (Lacity & Willcocks 2001). But in this chapter the evidence on which such claims are based is unpacked, and it will be shown that while in some cases substantial benefits accrue from IT outsourcing, the strategy can also lead to a number of negative outcomes. The most common of these is a failure to deliver the benefits that were the primary reason for engaging in the activity in the first place. Because of the significant disruption and expense caused when outsourcing is entered into, this fundamental failure means that funds and management attention are diverted from other more fruitful business strategies, often for considerable periods.

Keywords: Transaction Cost; Service Quality; Switching Cost; Business Case; Transaction Cost Economic (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-540-88851-2_6

Ordering information: This item can be ordered from
http://www.springer.com/9783540888512

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

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().