Numerous corporations today are outsourcing specific
information systems (IS) functions. The diversity of these outsourcing
arrangements goes well beyond that associated with the more traditional
facilities management. This paper examines outsourcing trends
and reports the results of an empirical study on IS outsourcing.
Overall IS outsourcing and its five component functions-- namely
applications development, systems operations, telecommunications,
end-user support, and systems planning and management-are examined
for their relationships with outsourcing success. The effect of
service quality of the provider and the ability of companies to
build a partnership on these relationships are hypothesized and
studied. Data from senior executives in 188 companies are gathered.
Outsourcing success is found to be highly related to the degree
of outsourcing of two functions, systems operations and telecommunications.
The results indicate that transaction cost theory provides a good
framework for IS outsourcing and that asset specificity of outsourcing
transactions needs to be considered in any decision to outsource.
Also, both service quality of the vendor and elements of partnership
such as trust, cooperation, and communication are important for
outsourcing success. Implications of the study for research and
practice are discussed.
Key
words and phrases:
business partnership
, information systems
outsourcing
, outsourcing success
, service quality
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