Chapter Twenty-Two Key Influence Factors and Issues in Global IT Outsourcing Management

The Structure of the Issue Strategic Management Outsourcing General issues IT Outsourcing Implementation Issues Managing IT Outsourcing

Research Framework Influences Moderating Factors Management Strategies Performance Implications

Management Strategy Structure Compensation Process Control Mechanisms Integrative Mechanisms Contract Mechanisms Communication Mechanisms Conflict Resolution Mechanisms Incentive Mechanisms

Structural Variables Control MechanismsIntegrative Mechanisms = Coordination Contract Mechanisms Formal Outcome Control Behavior Control Informal Example: Bureaucrac y Example: Org Culture Degree Breadth Diversity Structural Mechanisms Liaison Position Cross-Unit Committee Integrator Matrix Increasing Sophistication Contract Specificity Rigid Flexible

Process Variables Communication MechanismsConflict Resolution Mechanisms Intensity Frequency Informality Openness Bidirectionality/Density Formality Asset Specificity Non/Relational CR Modes Strategies Compromise Horse-trading

Issues Specific to Global Nature of Outsourcing  Strategic impact (“size”?)  Technological uncertainty (“gap”)  Functional complexity  Procedural knowledge/uncertainty (“stability”)  Asset specificity  Culture differences  Interdependency

Results of Research: Advice  Age/Scope relationships: Role of familiarity and experience  Cost & Corporate Culture are top selection reasons  Clients let vendors manage technological complexity; this is the main reason for outsourcing

Results of Research: Advice, cont’d  Strategic applications require formal communication and explicit control over vendor.  Collectivist vendors require flexibility in control and monitoring  Big culture differences require outcome, not behavior, control mechanisms  Low performance documentation implies process (=behavior) control