An Integrated Model of Success in IT Outsourcing Relationships: Implications for the Public Sector

An Integrated Model of Success in IT Outsourcing Relationships: Implications for the Public Sector

Francois Duhamel (Universidad de las Américas, Mexico), Isis Gutiérrez-Martínez (Universidad de las Américas, Mexico), Sergio Picazo-Vela (Universidad de las Américas, Mexico) and Luis Felipe Luna-Reyes (Universidad de las Américas, Mexico)
DOI: 10.4018/978-1-4666-4860-9.ch009
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Abstract

Possible remedies for the failure of IT outsourcing in the public sector include the improvement of knowledge-sharing processes over organizational boundaries between partners, who may learn more about the problems that occur while looking at possible solutions together. Ensuring the right flow of knowledge in the two directions is central to the success of IT outsourcing operations. However, these solutions do not fully acknowledge the different interrelationships between the main factors affecting knowledge transfer in outsourcing relationships in a dynamic way. In this chapter, the authors apply previous research on modeling knowledge-sharing across boundaries to IT outsourcing contracts during the transition phase where both partners initiate an IT outsourcing relationship. Simulation experiments suggest that four reinforcing processes play key roles in the progress of the outsourcing relationship: trust, outsourcers' and providers´ knowledge, commitment, and interfacing. The authors propose future research directions to conduct empirical test of the conceptual model in the context of the Mexican Public Administration.
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Literature Review

The relationship between the outsourcer and the service provider unfolds over several stages in which objectives and outcomes are constantly negotiated: before the contract, over the duration of the contract, and after the end of the contract (for potential renewals and extensions) (Cullen, Seddon, & Willcocks, 2005). This process of continuous negotiation helps partners develop a mutual understanding about the work to be done and how to correct mistakes based on common experiences. We consider IT outsourcing as a project, focusing on the successive phases of transition and adjustment between a client and a service provider that occur before the service can be considered in a “steady-state” (Cullen & Willcocks, 2003; Tiwari, 2010). This approach applies both to private firms and public administration outsourcing.

Articulating IT outsourcing requirements in that context often requires addressing many issues associated with knowledge sharing, collaboration, and communication problems between partners as they seek to reconcile differences in practices, languages, culture, and worldviews (Levina & Ross, 2003; Levina & Vaast, 2005). Knowledge exchange in outsourcing relationships is facilitated by the creation of interfaces as a bridge between the outsourcer and the provider during the different phases of the outsourcing relationship (Levina & Vaast, 2005).

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