Title

IT outsourcing in public organizations: How does the quality of outsourcing relationship affect the IT outsourcing effectiveness?

Date of Award

2005

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Administration

Advisor(s)

Stuart I. Bretschneider

Keywords

Outsourcing, Public organizations, Information technology

Subject Categories

Public Administration | Public Affairs, Public Policy and Public Administration | Social and Behavioral Sciences

Abstract

Many governments have developed and improved their information systems by outsourcing their IT projects. Despite the wide use of private IT vendors for public organizations' IT projects, there has been limited research on IT outsourcing in the public sector. Since organizational, institutional and environmental conditions of public organizations are inherently different from private vendors, governments are faced with the challenges of building productive relationships with private vendors based on mutual trust and shared understanding.

This study analyzes how the quality of relationship between government project managers and vendors affects outsourcing effectiveness . The first part of the theoretical framework of this study focuses on the importance of outsourcing management capability of public organizations along with vendors' capabilities. The framework theorizes that outsourcing management capability is one of the critical factors affecting the quality of outsourcing relationship between client and vendor. The second part of the framework identifies the factors critical to achieving the desired effectiveness of outsourcing . The dependent variable of the first part, the quality of outsourcing relationship , becomes an antecedent determining outsourcing effectiveness .

This research uses the qualitative and quantitative data collected from semi-structured interviews with 15 IT project managers and five vendors and a survey of 50 IT project managers in a local government in Seoul, Korea. The analysis of interview data and the two stage least squares analysis of survey data support that the quality of relationship adds positive values to the effective IT outsourcing implementation. This study also found that in order to improve the quality of outsourcing relationship local government should pay attention to the improvement of outsourcing management capability .

This study suggests the failure in achieving outsourcing goals is not just caused by either vendor or client, but by the association of two entities. Another message that this study delivers is that public organizations should build the internal process to enhance their outsourcing management capability . Particularly, public organizations need to incorporate the lessons learned from past experiences of managing outsourcing relationships into a formal process to share the tacit knowledge among all the outsourced project managers with varying degrees of capability of managing outsourcing.

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