Retained Organizations in IT Outsourcing

Abstract

IT outsourcing is a strategic option which enables companies to focus on their core competencies. Over time however, many outsourcing arrangements suffer from severe problems. While the design of retained organizations is generally seen as a critical element, there is hardly any empirical evidence on how the choice of the organizational setup is linked to the occurrence of outsourcing management problems later on. In this work, a quantitative study across various outsourcing arrangements is used to identify the key outsourcing management problems and their interdependency with organizational attributes of retained organizations. It is shown that the key problems differ by outsourcing degree, and critical organizational attributes for each of these problems are unveiled. The paper’s objective is to enhance the design of retained organizations to enable more mature and successful outsourcing solutions as well as to provide foundations for future IS research.