Strategic and Ethical Issues in Outsourcing Information Technologies

Abstract

Outsourcing of information technology (IT) is the transfer of a company’s information technology functions to external vendors. Ordinarily, such transfer is considered only with regard to its strategic and economic impact on the organization. However, as the recent practice demonstrated, cost-benefit considerations and other strategic considerations are not sufficient to analyze an outsourcing case. Important ethical concerns relating to fiduciary responsibilities, insiders’ bidding for outsourcing contracts, and the like, are also pertinent to the analysis of outsourcing. This chapter will identify major ethical problems and will propose guidelines for ethical conduct in the process of outsourcing IT. Such guidelines could have broad practical implications for the practice of outsourcing. The chapter will analyze literature on outsourcing models and professional ethical standards. It will have the following structure. First, the benefits and models of outsourcing information technology will be discussed. Second, ethical literature in general and professional organizations’ codes of ethics in particular will be considered. Third, a recent case of IT outsourcing will be presented and analyzed. The ethical standards established in the thesis will be applied to the case. Finally, generalized ethical guidelines will be suggested for outsourcing models.