Ned Kumar and Prashant C' Palvia

1
22 Key Influence Factors and Issues in Global IT
Outsourcing Management

• Ned Kumar and Prashant C. Palvia
• GIRM seminaari, Tampere 6.5.2003

2
Introduction

• Global IT outsourcing as a more profitable than
  domestic outsourcing
• The management of the outsourcing relationship
  becomes more complex (distance, national,
  culture)
• Global IT outsourcing is driven by transaction
  cost economies in terms of personnel, skill, and
  productivity
• Kumar and Palvia define global IT outsourcing as
  any contribution to a client organization by one
  or more external vendors with a different country
  of origin in tangible, intangible, human, and/or
  nonhuman resources related to the IT
  infrastructure.

3
Global Information Technology Outsourcing
Management(GITOM) model
Influence Factors
ManagementStrategies
Performance Implications
Moderating Factors

• influence factors (problems that affect the
  relationship management)
• management strategies (next slide)
• morerating factors (age of partnership, client
  and vendor attributes)
• performance implications (effectiveness,
  efficiency, commitment)

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Elements of Management Strategy

• Control Mechanisms
• formal and informal (bureaucratic vs. cultural
  control)
• Interorganizational Coordination
• Contract Specify
• Collaborative Communication
• Conflict Management

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Issues in Managing Global IT OS Relationships

• Age of the partnership
• Competitive pricing and similarities in corporate
  culture
• Trust between firm and outsourcer
• Formal comminication channels and explicit
  control mechanism
• Successfully managed relationship
• Control mechanism
• Measureable (clear metrics and documentation)

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Results and Implications

• Age of the partnership
• Competitive pricing and similarities in corporate
  culture
• Trust between firm and outsourcer
• Formal communication channels and explicit
  control mechanism
• Successfully managed relationship
• Control mechanism
• Measureable (clear metrics and documentation)

7
Current Trends in Outsourcing

• Kumar and Palvia (history)
• ASP (Application Service Provider)
• NetSourcing Model (professional/experienced
  services)
• Current
• Business Process Outsourcing
• e-business on demand

8
Conclusion

• Define precisely what you want to outsource
  (How?, one or many outsourcers)
• Do your homework when selecting an outsourcer
• Select on outsourcing provider that can you grow
  with you and scale their services easily as your
  business flourishes
• Have a clear metrics (responsibility matrix)
• Study the providers business model and have
  contracts that would conribute to mutual
  profitability (partnership, kumppanuus)
• Outsourcing provider assign one empowered
  Project Manager -gt feedback path between the
  company and outsourcing provider