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Abstract:
Numerous corporations today are outsourcing specific information systems (IS) functions. The diversity of these outsourcing arrangements goes well beyond that associated with the more traditional facilities management. This paper examines outsourcing trends and reports the results of an empirical study on IS outsourcing. Overall IS outsourcing and its five component functions—namely, applications development, systems operations, telecommunications, end-user support, and systems planning and management—are examined for their relationships with outsourcing success. The effect of service quality of the provider and the ability of companies to build a partnership on these relationships are hypothesized and studied. Data from senior executives in 188 companies are gathered. Outsourcing success is found to be highly related to the degree of outsourcing of two functions, systems operations and telecommunications. The results indicate that transaction cost theory provides a good framework for IS outsourcing and that asset specificity of outsourcing transactions needs to be considered in any decision to outsource. Also, both service quality of the vendor and elements of partnership such as trust, cooperation, and communication are important for outsourcing success. Implications of the study for research and practice are discussed.
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Notes on contributors
Varun Grover
Varun Grover is an Associate Professor of Information Systems in the Management Science Department at the University of South Carolina. He holds a B.Tech. in electrical engineering from the Indian Institute of Technology, New Delhi, an M.B.A. from SIUC, and a Ph.D. in MIS from the University of Pittsburgh. Dr. Grover has published extensively in the information systems field, with over 60 publications in refereed journals. His current areas of interest are business reengineering, strategic information systems, IS outsourcing, telecommunications and interorganizational systems, and organizational impacts of information technologies. His work has appeared in journals such as Journal of Management Information Systems, MIS Quarterly, Communications of the ACM, Decision Sciences, IEEE Transactions in Engineering Management, California Management Review, Information and Management, Database, Omega, Interfaces, Long Range Planning, Information Systems Management, Journal of Systems Management, and numerous others. He has recently coedited a book entitled Business Process Change: Concepts, Methods and Technologies. Dr. Grover is the recipient of the Outstanding Achievement Award from the Decision Sciences Institute. He is currently on the Editorial Review Board of the Journal of Information Technology Management, the Journal of Management Systems, the Journal of Market Focused Management, and the Journal of Electronic Commerce, and is an active referee for twelve other journals. He has also consulted with numerous organizations and is a member of TIMS, DSI, and AIS.
Myun Joong Cheon
Myun Joong Cheon is a faculty member at the University of Ulsan in Ulsan, Korea. He has a Ph.D. in MIS from the University of South Carolina. He has published in journals such as Information & Management, Database, Journal of Database Management, and the European Journal of Information Systems. Dr. Cheon has done research in database management, IS research methodologies, and IS outsourcing.
James T.C. Teng
James T.C. Teng is an Associate Professor at the College of Business Administration, University of South Carolina. He earned his M.S. in mathematics from the University of Illinois at Urbana-Champagne, and his Ph.D. in MIS from the University of Minnesota. Dr. Teng’s research and consulting interests are in the areas of information management, decision support systems, outsourcing, and process change. He has published numerous articles in journals such as Journal of Management Information Systems, Decision Sciences, Information & Management, California Management Review, INFOR, Database, European Journal of IS, Information Systems Journal, IEEE Transactions in Engineering Management, and others. In 1992 he won the Outstanding Achievement Award from the Institute of Decision Sciences.
