Skip to main content

Risks to Consider When Negotiating IT Outsourcing Agreements

  • Chapter

Part of the book series: Lecture Notes in Computer Science ((LNISA,volume 8002))

Abstract

Outsourcing IT can deliver substantial business benefits. However, it also carries significant risks and costs. Current industry practices in negotiating IT outsourcing agreements are based on ideology, fashion and personal expectations rather than structured techniques. Subsequently, a large proportion of IT outsourcing agreements either fail to deliver expected results or terminate abruptly, with severe consequences to the organisation.

An Outsourced IT environment is complex. It is also exposed to many internal and external pressures. The long-term nature of an IT Outsourcing agreement also poses additional challenges, as the agreement needs to withstand numerous changes. These include changes not only affecting the outsourced IT department directly, but changes to client’s or supplier’s business priorities, and economic or global influences.

Research shows that poorly crafted agreements factor significantly in the eventual failure of such agreements. The following paper explores the risks that need to be considered when negotiating IT Outsourcing Agreements.

This is a preview of subscription content, log in via an institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   39.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Barthélemy, J.: The hidden costs of IT outsourcing. Sloan Management Review 42(3), 60–69 (2001)

    Google Scholar 

  • Barthélemy, J.: The seven deadly sins of outsourcing. Academy of Management Executive 17(2) (2003)

    Google Scholar 

  • Barthélemy, J.: The hard and soft sides of IT outsourcing management. European Management Journal 21(5), 539–548 (2003a)

    Google Scholar 

  • Beaumont, N., Costa, C.: Information technology outsourcing in Australia. Information Resources Management Journal 15(3), 14–31 (2002)

    Article  Google Scholar 

  • Brams, S.J., Taylor, A.D.: The Win-Win Solution: Guaranteeing Fair Shares to Everybody, p. 148. W. W. Norton & Company (1999)

    Google Scholar 

  • Chandar, S., Zeleznikow, J.: The Need to Negotiate and Govern Technology Outsourcing Agreements. In: Proceedings of the 7th International WeB (Working for E-Business) 2006 Conference, November 29, 30-December 1, pp. 176–185. Victoria University, Melbourne (2006) ISBN 178-1-86272-670-3

    Google Scholar 

  • Cohen, L., Young, A.: Multisourcing: Moving beyond Outsourcing to achieve growth and agility. Harvard Business School Press (2006)

    Google Scholar 

  • Currie, W., Willcocks, L.P.: New strategies in IT-outsourcing: Major trends and global best practices. Business Intelligence (1998)

    Google Scholar 

  • De Loof, L.A.: Information Systems Outsourcing: Theories, Case Evidence and a Decision Framework. In: Wilcocks, L.P., Lacity, M.C. (eds.) Strategic Sourcing of Information Systems. John Wiley & Sons (1996, 1998)

    Google Scholar 

  • Elitzur, R., Wensley, A.: Game Theory and the IS Outsourcing Contracts. In: Wilcocks, L.P., Lacity, M.C. (eds.) Strategic Sourcing of Information Systems. John Wiley & Sons (1996, 1998)

    Google Scholar 

  • Earl, M.J.: The Risks of Outsourcing IT. Sloan Management Review 37(3), 26 (Spring 1996)

    Google Scholar 

  • Everest Group (1998) Outsourcing Journal September 1998 Issue (accessed March 2007). Source: http://www.outsourcing-journal.com/sep1998-insight.html

  • Fisher, R., Ury, W., Patton, B.: Getting to Yes: Negotiating an Agreement without giving in, Century Business (1994)

    Google Scholar 

  • Gilley, K., Rasheed, A.: Making more by doing less: An analysis of out-sourcing and its effects on firm performance. Journal of Management 26(4), 736–790 (2000)

    Article  Google Scholar 

  • Gottschalk, P.: IS/IT Outsourcing E-Business Strategy, Sourcing and Governance, ch 9. Idea Group Publishing (2006)

    Google Scholar 

  • Gottschalk, P., Solli-Sæther, H.: Managing Successful IT Outsourcing Relationships. Idea Group Publishing (2006)

    Google Scholar 

  • Graham, R.: The Outsourcing Contract. In: Angel, J. (ed.) Technology Outsourcing, pp. 66–112. The Law Society, London (2003)

    Google Scholar 

  • Harvard Business School (2003) Harvard Business Essentials: Negotiation. Harvard Business School Publishing Corporation. 1-11, 13-28

    Google Scholar 

  • Hirschheim, R., Lacity, M.C.: The myths and realities of information technology insourcing. Communications of the ACM 43(2), 99–107 (2000)

    Article  Google Scholar 

  • Kolb, D.M., Williams, J.: Breakthrough Bargaining. Harvard Business Review, 93 (February 2001)

    Google Scholar 

  • Lacity, M.C., Wilcocks, L.P.: Relationships in IT outsourcing: A stake-holder perspective. In: Zmud, R.W. (ed.) Framing the Domains of IT Management: Projecting the Future Through the Past, pp. 355–384. Pinnaflex Educational Resources, Cincinnati (2000)

    Google Scholar 

  • Wilcocks, L.P., Lacity, M.C.: Strategic Sourcing of Information Systems. John Wiley & Sons (1998)

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Chandar, S., Zeleznikow, J. (2014). Risks to Consider When Negotiating IT Outsourcing Agreements. In: Dershowitz, N., Nissan, E. (eds) Language, Culture, Computation. Computing of the Humanities, Law, and Narratives. Lecture Notes in Computer Science, vol 8002. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-45324-3_14

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-45324-3_14

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-45323-6

  • Online ISBN: 978-3-642-45324-3

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics