Understanding transition performance during offshore IT outsourcing

Purpose - Within an IT outsourcing relationship, transition represents a critical and complex phase that starts immediately after contract signing. Transition involves handing over outsourced activities from client firm to service provider firm and accompanies a new way of operating. The purpose of this paper is to determine and detail factors influencing the performance of transition phase within global IT outsourcing relationships. Design/methodology/approach - In this paper, the authors present a framework for transition performance that includes four factors: transition planning, knowledge transfer, transition governance and retained organization. This framework is tested and enriched by utilizing a single, in-depth case study involving over 25 interviews with a global offshore IT outsourcing engagement. Findings - It was found that knowledge transfer and transition governance are more critical factors than transition planning and retained organization for transition performance. This was due mainly to two reasons: the critical challenges faced, within the scope of these factors, had higher potential to disrupt transition; and both these factors and their related issues required a significant joint and coordinated effort from client and service provider firms, thereby, making implementation challenging for transition. Originality/value - Practitioners have suggested that over two-thirds of failed outsourcing relationships are due to transition-related challenges. This paper represents one of the first in-depth studies that provides insights from a real-life global outsourcing engagement, which contributes to and complements existing literature on IT outsourcing by providing a greater understanding of transition. Furthermore, it provides practitioners with insights and best practices that can be used to guide transitions in real-life engagements

Towards a theory of information systems outsourcing risk

Information systems outsourcing risks are a vital component in the decision and management process associated to the provision of information systems and technology services by a provider to a customer. Although there is a rich literature on information systems outsourcing risks, the accumulated knowledge on this area is fragmented. In view of this situation, an argument is put forward on the usefulness of having a theory that integrates the various constructs related to information systems outsourcing risks. This study aims to contribute towards the synthesis of that theory, by proposing a conceptual scheme for interpreting the literature and presenting a preliminary version of a catalog of information systems outsourcing risks. Proposals for subsequent work towards the generation of the theory of information systems outsourcing risk are suggested

Effective Strategies for Managing the Outsourcing of Information Technology

More than half of information technology (IT) outsourced projects fail, primarily due to a lack of effective management practices surrounding the outsourcing end-to-end process. Ineffective management of the IT outsourcing (ITO) process affects organizations in the form of higher than expected project costs, including greater vendor switching or reintegration costs, poor quality, and loss of profits. These effects indicate that some business leaders lack the strategies to effectively manage the ITO process. The purpose of this single-case study was to apply the transaction cost economics (TCE) theory to explore strategies 5 business professionals use to manage an ITO project in a financial services organization located in the Midwestern region of the United States. Participant selection was purposeful and was based on the integral role the participants play on the ITO project. Data collection occurred via face-to-face semistructured interviews with the participants and the review of company documents. Data were analyzed using inductive coding of phrases, word frequency searches, and theme interpretation. Three themes emerged: vendor governance and oversight, collaborative strategic partnership, and risk management strategies enabled effective management of ITO. Identifying and executing appropriate outsourcing strategies may contribute to social change by improving outsourcing infrastructure, which might support job creation; increasing standards of living, especially within emerging markets; and heightening awareness of different cultures, norms, and languages among people living in different regions around the world to establish commonalities and gain alignment with business practices

Open innovation practices applied to service innovation : a study of the Norwegian service sector

Open Innovation (OI) has become one of the most predominant topics in innovation management. However, most literature has evolved around the effects and best practices for product manufacturers. Nevertheless, service industries represent 60-70 percent of GDP in most western countries. Therefore, this thesis is motivated by a desire to see how the practices of OI apply to this largely overlooked industry. The OI concept involves going beyond company borders to include external inflows as well as internal outflows, but also involves opening a company’s business model to facilitate these flows. Firstly, the thesis examines the existing academic literature on the topic. Thereafter, it analyzes the theoretical fit between OI practices and service innovation, before studying whether OI practices are applicable to service innovation in the six Norwegian case studies. The findings show that theoretically OI is a valuable concept in service innovation, due to the similarity of OI and service innovation practices. However, the empirical findings indicate that OI practices within five of the companies are limited to external inflows, whereas the sixth company that provides knowledge intensive services is limited to internal outflows. The discoveries indicate that the incentives for internal outflows are not obvious for management, and therefore this affects their likelihood of adapting an open business model. Investments in OI management skills are absent in all firms, resulting in the lack of acknowledgement towards the importance of having a holistic perspective on innovation efforts. This is important because open innovation will ultimately increase profit through alternative revenue streams. However, the study shows that the lack of tradable intellectual property might inhibit the outbound innovation processes in service firms. This emphasizes the importance of creating more heterogenic service experiences for customer’s instead of standardized, which are easier to imitate. To excel in open innovation, companies need to find their point of differentiation, which will serve as their “protection mechanism”. The thesis suggest that when a company has found their leverage point, they will no longer be characterized by their fear of sharing new ideas, risk aversion, change reluctance and dread of failure. The security of their leverage point will enable them to out-innovate their competitors. Due to the unexplored nature of the concept, the study appeals for future research in the field of open service innovation