Stay, switch or back : Evaluating the IT sourcing cycle.

IT outsourcing has been a rich source for discussion since the landmark deal between Kodak and IBM in July 1989, being seen by many as the agreement that started outsourcing being perceived by companies as a serious strategic choice. With agreements generally signed for between 5 and 10 years, the research looks at what happens when an outsourcing agreement ends, either early or at contract end.The research looks at IT sourcing strategies within UK private organisations using mixed-methods research, a qualitative case study and a qualitative survey. Two frameworks were developed to facilitate the research, the IT Sourcing Cycle and the IT Functions & Systems Diamond. The Service Dynamics (SERVDYN) instrument was also created to gauge factors relating to service performance, quality and relationship in the IT sourcing decision. The Case Study, with data collected via semi-structured interviews and supporting documentation, seemed to show results different from the perception of backsourcing in previous studies (McLaughlin & Peppard 2006, Veltri et al 2008). It was clear that although the stated reasons for the decision were largely the same for outsourcing and backsourcing, they only appeared to tell part of the story. The Transition stage of the IT Sourcing Cycle proved the most revealing, with the implications for practise going further than had been previously found via secondary research. The survey was sent to 794 larger private UK companies, of which 69 responded. The survey instrument was designed to collect the views of respondents of various reasons, benefits etc. for those with different IT sourcing strategies; in-house, outsourced, switched vendors or backsourced. The research findings seem to suggest that although common reasons were given for the various sourcing options taken, there were other forces at work during the decision phase. Although service and relationship quality appear to play a part in the decision phase of the IT sourcing cycle, further research is required to ascertain if it provides a significant input to trigger the movement from Operation to Decision phase of the IT Sourcing Cycle.