ABSTRACT

Abstract: The practice of outsourcing of information systems (IS) is a global phenomenon that has increased dramatically over the past twenty years. While there is a considerable body of literature devoted to whether or not IS should be outsourced and the benefits and pitfalls of outsourcing, less work has focused on identifying the factors that are important in managing the relationship between an organization and an outsourcer, and how control can be achieved when such a critical organizational function is outsourced. This chapter will draw on three case studies to focus on the key areas that need to be managed: inadequate contract specifications, unrealistic initial expectations of performance improvements, different organizational cultures, the loss of skills and knowledge, ineffective communication and information-sharing processes, inadequate performance measures and incentives, an absence of trust, and adverse reactions of employees.