The new world of information technology outsourcing

Reviewer: John J. Hirschfelder

The author reports the conclusions of a study of over 50 contracts for the outsourcing of information services (IS). Conventional wisdom is that companies outsource IS commodity-type activities (installation and maintenance), while retaining strategic planning in-house. Recently there have been a variety of more complex deals in which the outsourcing is tied to business strategy. Typically, the goals are improvement of IS beyond the capability of the in-house organization, improving the contribution of information technology to the company's core business, or creating a vehicle for exploitation of information technology developed in-house. The structure of the outsourcing contract must support the company's strategic intent. Failures in outsourcing arrangements result from a mismatch between the strategic intent of the client and the motivation of the vendor. A few examples of recent strategic outsourcing agreements are identified, but are not described in any detail.