Projects: Managing Escalation in Outsourcing

As we saw in Chapter 1, over the past decades outsourcing has gained significant importance as an arrangement for managing various organizational activities. Similarly, business process outsourcing and offshore outsourcing are gaining momentum worldwide. Even so, research shows that outsourcing has a mixed track record: in most cases organizations get fewer benefits than they expected and more worryingly, a number of companies encounter severe problems as a consequence of outsourcing (Lacity and Willcocks, 2001, 2009). Furthermore, in observed practice organizations often get trapped in outsourcing projects that are clearly doomed to fail. In these cases decision makers allocate more and more resources to troubled ventures instead of admitting to the fundamental problems and facing the fact that the projects should be re-directed or abandoned if even more painful future losses are to be prevented.