Exploring information technology outsourcing relationships: theory and practice

A growing concern among the organisations who are actively involved in Information Technology outsourcing is post-contract management and the ensuing development of what many practitioners and scholars have coined the ‘outsourcing partnership’. This paper integrates theoretical concepts from organisation theory, social exchange theory, and relational contract theory with existing research on IT outsourcing, to develop a conceptual model for understanding the relationship. In particular, we conceptually elaborate and then address the relationship’s properties identified as interactions, contract, context, structure, and behavioural dimensions. Preliminary exploratory research into relationship practice in twelve organisations involved in outsourcing presents some interesting findings that advance the thinking about the outsourcing relationship. We found the conceptual model useful in elucidating important relationship management areas, highlighting not only the outsourcing relationship’s contractual, social, and economic characteristics, but also many additional elements found to have relevance in practice. ACKNOWLEDGEMENT The authors are indebted to Dr. Anna Psoinos for reading earlier versions of this paper. This research was funded by the 1996-1998 Business Scholarship Award from the Lloyd’s of London Tercentenary Foundation. An earlier, and much shorter version of this paper was presented at the 18 International Conference on Information Systems, Atlanta, Georgia, 1418 December 1997.