A Decision Procedure for the Where and How to Outsource


Many organizations are currently deciding whether to insource or outsource their IS function or parts thereof, but are unsure as to what kind of organizational structure to arrange for sourcing and where to locate the sourced activities. To assist in this matter, several IT consultancy firms are providing sourcing consultancy to their clients, resulting in a large body of practical knowledge that is stored in the experience of consultants. Systematic scientific knowledge is largely based upon qualitative case studies. This chapter presents the results of a policy capturing study that attempts to quantify the sourcing advice practice. Twenty-nine management consultants with experience in sourcing advice were presented with examples of situations in which sourcing advice was to be given. Using Factor Analysis and Multilevel Regression the researchers obtained insight into how variables such as costs, flexibility, time-to-market, and quality influence decisions with regard to both sourcing location as well as sourcing relationship. The research method that was used proved to be helpful in the explicitation of knowledge of consultants but needs further refinement.

Collaboration in Outsourcing: A Journey to Quality