Preface	5
	Contents	6
	Part I: Overview	10
	Information Technology Outsourcing in the New Economy – An Introduction to the Outsourcing and Offshoring Landscape	11
	1 Introduction	11
	2 IT Outsourcing Motivation and History	12
	3 Offshore Outsourcing	14
	4 Motivation for the Second Edition	16
	5 Book Structure and Outline	17
	5.1 Determinants of the IT Outsourcing Decision	19
	5.2 Arranging and Managing IT Outsourcing Relationships	20
	5.3 Experiences and Outcome of IT Outsourcing	21
	5.4 Vendor View and Individual Level Perspective	23
	5.5 Application Service Providing (ASP) and Business Process Outsourcing ( BPO)	24
	5.6 Offshoring and Global Outsourcing	26
	6 Conclusions	27
	References	28
	Part II: Determinants of the IS Outsourcing Decision	32
	Costs, Transaction-Specific Investments and Vendor Dominance of the Marketplace: The Economics of IS Outsourcing1	33
	1 Introduction	33
	2 Theory Development and Hypotheses	35
	2.1 Production Economies	35
	2.2 Transaction Economies	36
	2.3 Financial Slack	38
	2.4 Firm Size	40
	2.5 Firm Performance	40
	3 Study Method	41
	3.1 Sample and Design	41
	3.2 Test of Non-Response Bias	43
	3.3 Procedure	44
	3.4 The Survey Design	44
	3.5 Archival Data	46
	4 Analysis and Results	47
	5 Discussion	50
	5.1 Production and Transaction Economics Findings	50
	5.2 Financial Slack Findings	51
	5.3 Firm Size Findings	51
	6 Study Limitations	52
	7 Conclusion	52
	References	53
	Appendix A	58
	Definition and Operationalization of Constructs in the Survey	58
	Selective Outsourcing of Information Systems in Small and Medium Sized Enterprises	62
	1 Introduction	62
	2 Theoretical Framework	64
	2.1 Transaction Cost Theory	65
	2.2 Resource-based Theory	66
	2.3 Power Theory	68
	3 Research Methodology	69
	3.1 Data	69
	3.2 Measures	69
	3.3 Partial Least Squares Analysis	71
	4 Empirical Results	72
	4.1 Descriptive Statistics	72
	4.2 Findings from Model Testing	73
	5 Discussion	75
	6 Summary and Outlook	78
	References	80
	Appendix	84
	Survey Items for Scales used in PLS Analysis (translated from German)	84
	Measurement Reliability	86
	Antecedents of Information Systems Backsourcing	87
	1 Backsourcing Phenomenon	87
	2 IS Backsourcing vs. IS Outsourcing	89
	3 Backsourcing Framework	92
	4 Economic Considerations	93
	5 Economic Considerations: Illustration	95
	6 Strategic Considerations	96
	7 Strategic Considerations: Illustration	97
	8 Relationship Considerations	98
	9 Relationship Considerations: Illustration	99
	10 Triangulation of Factors	100
	11 Multiple Factor Considerations: Illustration	100
	12 Conclusion	101
	References	103
	IT Sourcing a Dynamic Phenomena: Forming an Institutional Theory Perspective	107
	1 Introduction	107
	1.1 Motivation	107
	1.2 Organizational Change in IS Research	108
	1.3 The Theoretical Perspective	109
	2 Outsourcing Changes - Definitions and Possible Change Processes	110
	2.1 Basic Definitions	110
	2.2 IS Outsourcing Change	115
	2.3 Antecedents to Change	117
	2.4 Changes Within Existing Arrangements	118
	3 Institutional Perspective	119
	3.1 Institutional Theory Perspective Explaining Change	119
	3.2 IS Sourcing and Institutional Processes	123
	4 Method	125
	5 Analysis and Findings	127
	6 Conclusion	132
	References	134
	Part III: Outsourcing Relationship Issues	139
	Legal and Tax Considerations in Outsourcing	140
	1 Introduction	140
	2 Structuring Outsourcing Projects	142
	3 Offshore Outsourcing Agreements	145
	3.1 The Scope of Services	146
	3.2 Service Levels	146
	3.3 Service Fees	147
	3.4 Managing the Service Provider	147
	3.5 Coordination of Project Activities	147
	3.6 Intellectual Property (IP)	148
	3.7 Privacy and Data Protection	149
	3.8 Employees and Subcontractors	150
	3.9 Other Issues in Agreements	151
	4 Project Term and Termination	153
	4.1 Automatic Renewal	154
	4.2 Early Termination	154
	4.3 Transition	154
	5 Tax Implications	155
	6 Governing Law and Jurisdiction	156
	6.1 Alternate Dispute Resolution (ADR)	156
	6.2 Enforcement of Foreign Awards and Judgments	157
	6.3 Applicability of Foreign Laws	158
	7 Negotiation	159
	8 Conclusion	161
	References	162
	Measuring and Managing IT Outsourcing Risk: Lessons Learned	164
	1 Introduction	164
	1.1 Risk Defined	165
	2 IT Outsourcing Risk	167
	2.1 Assessing IT Outsourcing Risk Exposure	168
	3 The Case Studies	173
	3.1 Managers’ Attitude Toward Risk	174
	3.2 Risk Management as a Series of Compromises	176
	3.3 Risk Management and Impact Evaluation	178
	3.4 Risk Management and Contract Design	180
	4 Discussion and Conclusion	183
	References	184
	Governance of Remotely Outsourced Software Development: A Comparison of Client and Vendor Perspectives	189
	1 Introduction	189
	2 Coordination and Control in IS Development	191
	3 Research Methods	194
	3.1 Data Analysis	197
	4 Results	198
	4.1 The Governance Mechanisms	198
	4.2 The Evolution of Governance Mechanisms	204
	5 Discussion	209
	References	212
	Appendix: The Cases	215
	Study 1	215
	Study 2	217
	Study 3	220
	Spiraling Effect of IS Outsourcing Contract Interpretations	225
	1 Introduction	225
	2 Tale of Two Contracts	226
	2.1 First Fidelity Bancorporation	227
	2.2 Republic Bank	229
	3 Conceptual Foundation	230
	3.1 Guiding Research Parameters	231
	4 Case Research Methodology	234
	4.1 Sample Selection	234
	4.2 Procedures	235
	4.3 Measures	235
	4.4 Analysis	239
	4.5 Case Descriptions	240
	5 Results	242
	5.1 Ideal IS Outsourcing Arrangements	242
	5.2 Types Are Better When?	247
	5.3 Discussion of Possible IS Outsourcing Arrangements	251
	6 Summary	254
	References	255
	Appendix 1: Case Study Rigour	257
	Part IV: Experiences and Outcome of IS Outsourcing	259
	The Normative Value of Transaction Cost Economics: What Managers Have Learned About TCE Principles in the IT Context	260
	1 Introduction	260
	2 The Outsourcing Phenomenon from the Lenses of Economics and Strategy	262
	2.1 Transaction Cost Economics	262
	2.2 Theoretical Counter-Attacks and Alternatives to TCE	264
	3 Research Approaches	265
	4 The Optimal Governance of IT: Lessons Learned and Principles Applied by IT Managers	269
	4.1 Lesson: TCE Logic Is Not Intuitive, and Managers Learned through Their Mistakes in the 1980’ s How to Craft More Effective Contracts in the Mid 1990’ s	269
	4.2 Lesson: Managers Realize Higher Performance When They Apply the TCE Principle to Not Outsource the Most Specialized Activities	272
	4.3. Lesson: Managers Realize Higher Satisfaction When They Apply the TCE Principle to Measure and Benchmark the Performance of IT Activities	275
	4.4 Lesson: Managers Realize Higher Performance When They Complement Their Use of Customized Contracts with Supportive Relational Norms. They Also Realize Higher Performance When Investing in Just Relational Norms	277
	5 Conclusion	281
	References	282
	Success of IS Outsourcing as a Predictor of IS Effectiveness: Does IT Governance Matter?	284
	1 Introduction	284
	1.1 Evolution of IS Outsourcing	284
	1.2 Objectives and Outline of This Paper	286
	2 The Theoretic Context of IS Outsourcing	287
	2.1 Strategic Alignment Model	287
	2.2 IT Governance	288
	2.3 Discussion	288
	3 Research Methodology	289
	3.1 Framework and Hypotheses	289
	3.2 Measurement of the Key Variables	291
	3.3 Data Collection	292
	4 Results	293
	4.1 Responses	293
	4.2 IS Outsourcing in General	293
	4.3 Testing the Base Relation H1	293
	4.4 Testing the Base Relations H2 and H3	294
	4.5 Testing the Moderating Relationship of Integration and Outsourcing Success (H4)	295
	4.6 Testing the Relationship Between IT Decision Power and Outsourcing Success (H5)	297
	5 Conclusions	298
	References	299
	Appendix	302
	Table A: Original Survey Questions	302
	Four Stories of Information Systems Insourcing	304
	1 Introduction	304
	2 Sourcing Definitions	306
	3 Research Design	306
	3.1 Research Project	307
	3.2 Data Collection	308
	3.3 Data Interpretation	314
	3.4 Research Validity	314
	4 Four Stories of Insourcing	316
	4.1 Story I – Senior Executives Enable Internal IS Managers To Cut Costs	318
	4.2 Story II – IS Managers Terminate Failing Outsourcing Contracts	324
	4.3 Story III – IS Managers Defend Insourcing	326
	4.4 Story IV – Senior Executives Confirm The Value of IS	330
	5 Morals of the Stories	334
	Moral 1: IS can indeed replicate outsourcing vendor strategies leading to reduced IS costs	334
	Moral 2: Perceptions of insourcing success are not solely related to financial outcomes	336
	Moral 3: Senior management’s perceptions of insourcing success depends upon IS management’s ability to convince them they are cost- competitive relative to the market	339
	6 Conclusions	342
	References	344
	Capabilities for Information Systems Outsourcing Success: Insights from the Resource- based View of the Firm	348
	1 Introduction	348
	2 Previous Research	348
	3 Theoretical Framework	353
	4 Model Development	354
	4.1 Vendor Capabilities	355
	4.2 Customer Capabilities	356
	4.3 Overall Capabilities	358
	4.4 Relationship Strength	358
	4.5 Quality	359
	4.6 Satisfaction	359
	5 Research Methodology	360
	5.1 Data Collection	360
	5.2 Operationalization of Constructs	363
	5.3 Analysis	363
	6 Results	366
	7 Discussion	367
	7.1 Limitations and Implications	370
	8 Conclusion	371
	References	372
	Appendix: Items and Descriptive Statistics	377
	Part V: Vendor View and Individual Level Perspective	380
	Vendor Strategies in the German Market for Information Technology and Business Process Outsourcing	381
	1 Introduction	381
	2 Conceptual Framework	382
	2.1 Analysis of Internal CSF	384
	2.2 Analysis of Strategy Profiles	386
	3 Methodology	387
	4 Empirical Results	388
	4.1 Macro Level Environment	388
	4.2 Analysis of Industry Structure	389
	4.3 Formation and Analysis of Strategic Groups	391
	5 Conclusion and Future Orientation	397
	Literature	399
	Work Outcomes and Job Design for Contract Versus Permanent Information Systems Professionals on Software Development Teams	403
	1 Introduction	403
	2 Study 1: The Survey Social Exchange and Norms of Reciprocity	406
	2.1 Social Exchange Relationships and Social Comparisons in IS Contracting	406
	2.2 Work Attitudes (Self-Assessments)	408
	2.3 Work Behaviors	410
	2.4 Work Performance	411
	2.5 Method	413
	2.6 Statistical Analysis	419
	2.7 Results	420
	2.8 Discussion	423
	3 Study 2: The Case Studies	424
	3.1 Job Design and Work Outcomes	424
	3.2 Site Selection and Research Setting	425
	3.3 Data Collection	425
	3.4 Textual Analysis: Analytical Strategy and Reliability Assessment	426
	3.5 Results	427
	3.6 Job Design Features	430
	4 Overall Discussion and Conclusion	432
	References	435
	When Subordinates Become IT Contractors: Persistent Managerial Expectations in IT Outsourcing	442
	1 Introduction	442
	2 Persistent Expectations in IT Outsourcing	444
	3 Study 1: Development of Theoretical Model	446
	3.1 Study 1: Method	447
	3.2 Study 1: Results and Theoretical Model	449
	4 Study 2: Validation of Theoretical Model	458
	4.1 Study 2: Method	458
	4.2 Study 2: Results	460
	4.3 Study 2: Discussion	463
	5 Conclusion	466
	5.1 Limitations and Future Research	467
	References	469
	Appendix	474
	Appendix A	474
	Appendix B	476
	Part VI: Application Service Providing and Business Process Outsourcing	477
	Understanding the ‘Service’ Component of Application Service Provision: An Empirical Analysis of Satisfaction with ASP Services	478
	1 Application Service Providers: Promise and Reality	478
	2 Understanding Satisfaction with ASP	480
	2.1 Satisfaction and IT Outsourcing	480
	2.2 Satisfaction and the ASP Business Model	482
	3 A Model of Satisfaction Determinants	483
	3.1 Defining the Satisfaction Construct	483
	3.2 The Role of Perceived Provider Performance	484
	3.3 Expectations about ASP Service: The Effect of Technical Guarantees and Functional Capability of the ASP	485
	3.4 Prior Experience of the Firm: The Effect of Prior Internet Usage, the Maturity of Internal IT and Prior Systems Integration	488
	3.5 The Disconfirmation Experience	491
	4 Research Method, Data Collection and Analysis	492
	4.1 Initial Qualitative Survey and Instrument Design	492
	4.2 Analyzing the Measure Validity and Reliability	494
	4.3 Assessing Potential Over Identification Issues	496
	4.4 Model Estimation and Goodness of Fit	497
	4.5 Findings from the Study	498
	5 Discussion of Results	500
	5.1 Implications from Findings	500
	5.2 Implications for IS Literature	502
	6 Conclusions and Directions for Future Research	503
	References	504
	APPENDIX	514
	Survey Instruments	514
	I Perceived Provider Performance	515
	II Satisfaction with ASP	515
	III Prior Internet Usage of the Organization	516
	IV Prior Systems Integration	516
	V Maturity of Internal IT	517
	VI Disconfirmation	517
	VII Functional Capability of the ASP	518
	VIII Technical Service Guarantees	518
	Developing a Sustainable Value Proposition in Web Services: Lessons from Strategic Management	519
	1 Introduction	519
	2 Web Services: A New Paradigm for Business?	520
	3 Key Factors for Sustaining Value in Web Services	521
	4 Three Pilars of Competitive Advantage	524
	4.1 Building Market Leadership	526
	4.2 Creating Strategic Differentiation	528
	4.3 Enhancing Revenue Generation	531
	5 Conclusion and Future Research Directions	534
	References	536
	Business Process Outsourcing, Knowledge and Innovation – A Study of Enterprise Partnership	538
	1 Introduction	538
	2 Research Scope and Methodology	540
	3 Background: Creating the Xchanging Company	541
	4 The Distinctive Business Model: Enterprise Partnership	542
	5 A New Implementation Model	545
	6 Competencies – ‘The DNA of Xchanging’	546
	6.1 The People Competency	547
	6.2 The Service Competency	548
	6.3 The Process Competency	550
	6.4 The Technology Competency	552
	6.5 The Environment Competency	555
	6.6 The Sourcing Competency	556
	6.7 The Implementation Competency – Grit in the Oyster?	558
	7 Progressing the Enterprise Partnerships Through Four Phases of Implementation	559
	8 Transforming The Back Office: Summary of Five Approaches	561
	9 The Xchanging Business Model – An Assessment	564
	9.1 Assessment of Partnership, Xchanging-style	564
	9.2 Sustainable Performance and Innovation in Xchanging Enterprise Partnerships	566
	9.3 The ‘Fit’ of the Xchanging Business Model	567
	9.4 Creating and Leveraging Knowledge	571
	10 Conclusion	573
	References	575
	Business Process Outsourcing: The Hysteresis Effect and Other Lessons	577
	1 Introduction	577
	1.1 Previous Research on BPO	579
	1.2 The Hysteresis Effect in Complex Outsourcing	580
	2 Method	582
	3 Case Study Findings	584
	3.1 Motivations	584
	3.2 Evaluations	584
	3.3 Sources of Advice	585
	3.4 Concerns	586
	4 Discussion	586
	4.1 Motivation	587
	4.2 Biases in the Evaluation Process	587
	4.3 Outsourcing, “Impression Management” and Cognitive Biases	589
	4.4 Other Issues and Concerns	589
	5 Implications and Recommendations for Decision- Makers	591
	6 Conclusion	594
	References	594
	Part VII: Offshoring and Global Outsourcing	597
	Business Process Offshoring to India: An Overview	598
	1 Introduction	598
	2 Offshore Outsourcing and the Global BPO Market	599
	2.1 Issues in Offshore Outsourcing	601
	3 India as an Offshore BPO Destination	603
	3.1 Key Features of the Indian IT and IT-enabled BPO Industry	604
	3.2 Economics of Business Process Offshoring to India	605
	3.3 Impact of IT and ITES Offshoring on the Indian IT Services Landscape	608
	3.4 Offshore Impact on IT Services Pricing	608
	3.5 Impacts and Implications of Offshore Outsourcing in the US	609
	3.6 Drivers and Inhibitors	609
	4 BPO Service Category Classification	612
	5 Case Study: GE’S BPO Operations in India	616
	5.1 GE Capital International Services (GECIS) India	617
	6 Conclusion and Challenges Ahead	621
	References	622
	The Maturation of Offshore Sourcing of Information Technology Work	624
	1 Offshore IT Sourcing Is Gaining IT Management Attention	624
	2 Four Stages of Offshore IT Sourcing	626
	2.1 Stage 1: Offshore Bystander	627
	2.2 Stage 2: Offshore Experimenter	629
	2.3 Stage 3: Proactive Cost Focus	630
	2.4 Stage 4: Proactive Strategic Focus	633
	2.5 Tech Insourcers: One Type of Stage 4 Firm	634
	3 U.S. Firms Will Move Up the Maturity Curve	636
	4 Offshore IT Sourcing by U.S. Firms Will Continue to Grow	637
	5 The Global IT Labor Supply Will Grow and Mature	638
	6 Recommendations for IT Executives	640
	References	641
	Appendix: Study Methodology	642
	The Study Sample	642
	Data Collection Approach	643
	Managing Cross-Cultural Issues in Global Software Outsourcing	644
	1 Managing Cross-Cultural Issues in Global Software Outsourcing	644
	2 Strategic Choice of Projects	646
	3 Managing the Relationship	647
	4 Staffing Issues	648
	5 Training	649
	6 Conclusions	650
	References	651
	Knowledge Management in Offshore Software Development	652
	1 Introduction	652
	2 Conceptual Scheme: Knowledge and Offshore Software Development	654
	3 Research Approach	657
	4 Case Description and Analysis	658
	4.1 Initiation and Growth Phase (1998 – 1999)	659
	4.2 Failure to Reach Maturity and Closure (1999-2000)	665
	5 Discussion and Implications	669
	5.1 Encultured Knowledge	669
	5.2 Embedded Knowledge	670
	5.3 Encoded Knowledge	671
	5.4 Implications for Practice	673
	5.5 Implications for Theory	674
	References	676
	Offshore Outsourcing: Challenge to the Information Systems Discipline	679
	1 The Growth of Offshoring	679
	2 The Immediate Consequences of Offshoring	679
	3 The Fundamental Nature of Offshoring	682
	4 Implications for the Future of the Discipline	683
	5 Conclusions	687
	References	689
	Index	692