The Outsourcing of Information Services: Transforming the Nature of Business in the Information Industry

Abstract

The structure of the decision faced by a firm to outsource or to retain information services is developed in this paper. Theory regarding the decision structure is discussed and the results of in-depth interviews with a variety of chief information officers presented. Specifically, the forces that drive the outsourcing decision are identified, the incentives and disincentives of outsourcing relationships being addressed in detail. A framework for contemplating the outsourcing option is presented, followed by recommendations on managing relationships with outsourcing vendors.