26th International Association for Management of Technology Conference - IAMOT 2017

Companies engage in outsourcing when it enters a contractual agreement to source a particular expertise from another company with the intent to meet specific business objectives. In outsourcing agreements, the client transfers completely or partially the operational responsibility related to a set of processes within a specific scope and over a set period of time. When the outsourced processes are related to the Information Technology (IT) infrastructure and regardless of where the processes are hosted - on premise or cloud based, the type of outsourcing is said to be IT outsourcing (ITO). This paper focuses on IT outsourcing and introduces a conceptual model for ensuring successful ITO. While the client and vendor share responsibility for success or failure in the outsourcing project, this study is conducted primarily from the perspective of outsourcing clients. Based on a literature review on ITO, the study proposes a theoretical model across the life span of an outsourcing project, of which the main steps include: 1. Defining the outsourcing strategy 2. Determining the appropriate delivery model 3. Following the outsourcing process 4. Identifying the causes of outsourcing failure and 5. Applying remedies towards successful outsourcing; As part of validating the theoretical model, data from outsourcing practitioners was collected through a structured questionnaire completed by professionals having participated in outsourcing projects as clients. The following findings resulted from analysing questionnaire responses: 1. Clients are prepared to give full responsibility to external vendors and partial responsibility to external vendors 2. Rather than using internal vendors, clients are more comfortable working with external vendors on a shared responsibility basis 3. Less experienced clients are more likely to retain operational responsibility, but paradoxically also tend to engage with multiple vendors. 4. The main reason why clients outsource is in order to focus on core business while vendors manage the IT processes and infrastructure 5. Clients are most successful at formalising expectations into a binding client-vendor contract. 6. Poor communication is the biggest barrier to successful outsourcing. 7. Responsibility for outsourcing failure is most likely shared between client and vendor. While clients are not inclined to outsourcing all strategic processes at once, many do outsource a significant portion of processes considered strategic. This research proposes a model for successful outsourcing in the specific context of outsourcing clients and in a manner that is consistent with the client’s outsourcing strategy. The rigor with which the present framework is researched lays a strong foundation for a similar research being done with the outsourcing vendor as a primary focus. A similar study on BPO would also constitute an invaluable addition to the outsourcing body of knowledge.