It Outsourcing

1. Introduction

This chapter states the problem area (section 1.1) and defines the thesis aim (section 1.2). Section 1.3 describes expected results while section 1.4 describes the thesis target groups. The thesis structure is shown in section 1.5.

1.1 Problem area

In the current dynamic and information technology (IT)-driven environment, organizations have to stay competitive through the use of new information technologies and tools. However, the development and maintenance of these new technologies are not an easy task. Organizations have to focus their efforts on what they do best, their core business. IT outsourcing has therefore become a viable option to hand over an IT-based service that would otherwise be an in-house service to an external provider (Gasco, Gonzalez & Llopis, 2005). Many organizations turn to IT outsourcing in order to achieve benefits as cost reduction, improved quality of service, higher external expertise, and risk reduction (Lei-da & Khali, 2002; Bahli & Rivard, 2005; Brandes, Brege & Lilliecreutz, 1997; Barthélemy, 2003; Kern, Lacity & Willcocks, 2000).

Even though organizations seek common benefits, there are always risks involved with an IT outsourcing project (Asif Pasha, 2005). Even if organizations are aware of "all" risks, they still cannot guarantee a successful project outcome. A risk analysis will definitely give the organization knowledge about common traps in an IT outsourcing project. In order to avoid these risks, organizations first need to understand common critical success factors (CSF) that have to be fulfilled in order to increase the possibility of success (Gasco, Gonzalez & Llopis, 2005; Brandes, Brege & Lilliecreutz, 1997).

In order to achieve benefits and raise the chance of success with an IT outsourcing project, our view is that organizations have to consider three areas: CSF, risks, and management. Figure 1 show these areas, which are needed before launch and during an IT outsourcing project. Complementary, table 1 shows literature used to create figure 1.

Figure 1: Areas to consider when managing IT outsourcing

The area of CSF (A) needs to be considered in order to understand what the organization should strive for. These factors describe conditions that need to be met to increase the possibility for success in IT outsourcing projects (Aggestam & Söderström, 2005). The risk factors (B) are the opposite of the critical success factors. Risks show the pitfalls that the organization has to avoid in order achieving its goals. Even if an organization knows its aims and risks, there has to be a process in place for how to achieve the aims. Management (C) is the process of planning, organizing, leading, coordinating and controlling the project towards the CSF (A) while