A Risk Based View of Influential Factors in IT Outsourcing Relationship for Large Multinational Companies: A Service Buyer Perspective

Research Background

The relationship in ITO has to cover the whole life cycle of the ITO, from contract negotiation to handling unexpected and unpredictable events as well as to create efficiently working climate on all working levels. There is no doubt that contracts are always: incomplete, the content is limited, and the available knowledge when designing the contract is restricted to the current known facts Williamson (1975, 1985). Therefore, contracts should be updated continuously to cover the actual demands, as well as to open for future business requests. However, this does not mean that the contracts can be open, as the risk of opportunistic behavior by the supplier must be safeguarded against to avoid negative consequences. This balance among limited size of contracts, enough flexibility to provide improvements and disclose opportunistic behavior combined with enough incentives for both parties open a wide field for ITO relationship to be practiced in a successful way.