Success factors in IT Outsourcing
Säntti, Mikko (2023-02-17)
M. Säntti
17.02.2023
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:oulu-202302171173
https://urn.fi/URN:NBN:fi:oulu-202302171173
Tiivistelmä
To survive and respond to the everchanging business world companies are seeking new ways to concentrate and improve core competencies, as well as improve their competitive status against the market. Companies are exploring how to exploit the core competencies of other companies. The goals of the partnership might differ depending on the scope of the partnership. The goal might be one or many of the following: cost reduction, access to higher quality service, access to technology and/or know-how.
Even if the first IT outsourcing was done around 30 years ago by Eastman Kodak and General Dynamics and the area has been studied quite heavily, the topic seems to be still difficult for companies to grasp the wanted benefits. As the IT outsourcing is widely used option in the business world and the results are not firm, I feel the topic is still relevant to study. The research question for the study is: “What factors affect the success of IT outsourcing relationship?”
The research question is answered through the literature review. From the literature review eleven high level success factors can be identified. In some cases, some factors are combined. The success factors are Cost and Quality, Trust, Alignment to business strategy, Culture, Communication, Contracts, Strategic Partnership, Governance, Management support, Infrastructure, and Know-how. How important each individual factors are in outsourcing engagement in question depends on the sort of the partnership.
The theoretical implications are very limited, but the practical implications regarding communication, trust and governance should be considered when companies enter IT outsourcing partnerships. Putting an emphasis on setting up proper governance functions and people who are good at communicating with the other party will pay the efforts back in success of the relationship.
Even if the first IT outsourcing was done around 30 years ago by Eastman Kodak and General Dynamics and the area has been studied quite heavily, the topic seems to be still difficult for companies to grasp the wanted benefits. As the IT outsourcing is widely used option in the business world and the results are not firm, I feel the topic is still relevant to study. The research question for the study is: “What factors affect the success of IT outsourcing relationship?”
The research question is answered through the literature review. From the literature review eleven high level success factors can be identified. In some cases, some factors are combined. The success factors are Cost and Quality, Trust, Alignment to business strategy, Culture, Communication, Contracts, Strategic Partnership, Governance, Management support, Infrastructure, and Know-how. How important each individual factors are in outsourcing engagement in question depends on the sort of the partnership.
The theoretical implications are very limited, but the practical implications regarding communication, trust and governance should be considered when companies enter IT outsourcing partnerships. Putting an emphasis on setting up proper governance functions and people who are good at communicating with the other party will pay the efforts back in success of the relationship.
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