Outsourcing, information leakage and the risk of losing technology‐based competencies

Abstract

Purpose To draw attention to a particular outsourcing risk that has not yet been adequately addressed in the literature, namely information leakage arising from acts of accidental disclosure or even purposeful betrayal by consultants that work for several client firms at the same time. Design/methodology/approach A review of the literature. Findings It illustrates how specialist IT service providers are playing pivotal roles in determining the extent to which unique firm specific skills and core competencies are being transferred to the wider industry context (via leakage) and becoming standard practices. It is shown that consultants face a dilemma as they are expected to spread cutting edge level expertise to their respective client firms, yet at the same time honour confidentiality commitments. Research limitations/implications Conceptual rather than empirical. Practical implications A management tool is developed for managers to aid decision making. Originality/value A critique of the outsourcing literature and a warning to managers to be aware of the risk of information leakage.