Client Influence on IT Outsourcing Vendors’ Operational Capabilities: A Relationship Learning Perspective

Operational capabilities are essential for any business in today’s highly competitive environment. Whereas prior research on IT outsourcing vendors’ operational capabilities has examined internal mechanisms, little is known about the effect of clients. This study focuses on clients’ influence based on multiple cases drawn from the Japan-China IT outsourcing context. What is unique about this context is that the majority of Japanese clients are large mature IT vendors themselves. As a result, the clients play a “teacher” role for the vendors, which emphasize a strong client orientation. From a relationship learning perspective, this study shows that client characteristics, i.e., the purpose of outsourcing, level of project management maturity, and sustainability and length of projects, contribute to vendors’ development of operational capabilities

Relationship between buyer and supplier in outsourcing of information technology services

Companies rely on others to achieve its goals. This is not only true in terms of management of the flows of information and materials through the supply chain but also in terms of performing specific processes and sub-processes intimately related to the company’s operation. IT Outsourcing (ITO) is increasing worldwide and the relational governance impacts the outsourcing outcomes (Lacity et al, 2016). This perspective is usually visited for the buyer and supplier perspectives using decision makers and leaving a gap in literature in terms of the perspective of the consultants. This paper aims at analysing, in ITO, how the development of the relationship between buyer and supplier strengthens supplier performance over time, from the perspective of the consultants. A survey to IT consultants was applied and then a multilevel analysis was performed, taking account for the aggregate values of the variables characterizing buyer supplier relationships based on Johnston and Staughton (2009), Krause et al. (2007) and Blonska et al. (2013). Findings show that strategic relationships are associated with higher supplier investment in relational management. In this type of relationship higher levels of trust are linked to an attribution of more recognised benefits from the relationship, and reciprocal investment to the buyer. Furthermore, an improvement of the dedication in the relation and an improved service performance were attributed by IT consultants to the supplier.info:eu-repo/semantics/publishedVersio

How Many Vendors Does it Take to Change a Light Bulb? Mitigating the Risks of Resource Dependence in Information Technology Outsourcing

As the scope and complexity of information technology outsourcing expand, the importance of the number of vendors adopted by a client is rising. What are the reasons why some companies contract with a single vendor while others contract with several? While there has been considerable research on this issue, we still lack a systematic understanding of why firms utilize different numbers of vendors. With the premise that clients’ contracts with their dominant outsourcing vendor create varying levels of resource dependence and therefore client risk, this study seeks to answer the following questions: First, to what extent do contractual conditions prompt clients to seek risk mitigation via an increased number of outsourcing vendors? Second, how do the respective resource levels of the client and vendor impinge on this relationship? From a resource-dependency perspective, we hypothesize a relationship between contract conditions (i.e., contract duration and type) and the number of vendors used by a client. We then explore client resource and resource-access conditions (i.e., MIS budget and vendor performance) that moderate this relationship between contract conditions and the number of vendors engaged by a client. The proposed model and hypotheses are tested using a sample of 311 organizations in Korea that had outsourced their IT functions to external service vendors. The empirical evidence sheds light on the role of resource conditions in the relationship between contract conditions and the number of vendors. The findings have significant implications for further research and practice

Unlocking path dependencies in Business Process Outsourcing decision making

The objective of this study is to examine the decision process and outcome at the end of an outsourcing contract and how this process evolves over time. Despite the vast amount of literature in IS Outsourcing, little is known about the determinants, the process, the context and the outcome of the last phase in an outsourcing relationship. In order to better understand the complexity and dynamics of the contract termination or extension, we will apply a process-theoretic logic. It draws on Path Dependence Theory which suggests that path decisions are rooted in circumstances or events that take place in precedent phases of the outsourcing process. Based on the results of 21 Business Process Outsourcing (BPO) cases, our findings confirm the existence of significant path-dependencies which lead to sub-optimal economic results. Once a business process has been outsourced, the client organizations get literally locked-in the chosen path and tend to continue the contract with the vendor, even if initial expectations did not accrue. In order to better understand the pattern of such path trajectories, a process model will be presented which integrates distinct stages of the service delivery phase, the expectations of the client organizations, and internal as well as external stimulation events that lead to expectation gaps. These stimulation events are necessary but non-sufficient conditions for breaking the path. In addition, significant resource commitments from the clients’ perspective are required for breaking the path. If these commitments are not be made, the lock-in situation prevails, i.e. back-sourcing or a vendor change is unlikely to take place

REVIEWING OUTSOURCING CONTROVERSY IN INDONESIA (An Exploratory Study of Human Resources Outsourcing Practice in Semarang City)

Outsourcing in Indonesia is still a controversy. The different concept of outsourcing between employers (vendors and users), employees/outsourced workers, and government makes another problem in outsourcing implementation, especially in industrial relationship either in enterprise and macro level. This study aims to determine the concept of outsourcing of each element of the tripartite, the problems that arise in the implementation, and solutions from each party, in dealing with the practice of the working system. The problems under study, based on specific issues related to industrial relations, including: wages, welfare programs, health and safety, discrimination, job security, and dispute resolution, and termination of employment. This qualitative research is an exploratory, with the data collection methods: focus group discussions, observations, interviews, and study documentation. The data collected from employers (vendors and users), the national unions, worker outsourcing, and government within the scope of Semarang city. The results showed that the problems that arise due to differences in each party's conception of the tripartite elements. Uncertainty rules of outsourcing is a major problem, giving rise to labor flexibility in the implementation, which implies profitable for each party, especially the workers of outsourcing. In the end, the regulation enforcement related to the implementation of the outsourcing firm is badly needed, to compromise the disputes of workers and employer interests