Managing Change in IT Outsourcing

IT outsourcing is considered a mature business strategy that provides an exquisite opportunity to quickly cater to changing market circumstances. Due to the extensive growth of outsourcing client IT functions in the last decade, a new provider industry has developed rapidly. As a result, the IT landscape is becoming more varied, with different outsourcing arrangements. Considering the multidisciplinary character of outsourcing, providers experienced with that arrangement complexity have increased substantially. Providers have to deal with various aspects such as strategy, capabilities and organizational structures. These aspects will clearly affect the providers' organizations and their performance towards their clients. Thus, starting an outsourcing venture means starting a change that requires adaptive behaviour. This involves the capability and willingness of the providers' employees to support this change. In the next decade, the most important challenge for providers will be to manage this change in order to provide a sustainable performance for their clients. Few studies in the field of IT outsourcing relations include the role of service providers in sourcing arrangements. Previous research has identified a provider's lack of sustainability in service performance as a recurring problem, that is the continuous delivery of high quality services over time. It can be argued that IT outsourcing providers who manage to establish a dynamic fit between sourcing capabilities and their own organizational structure are less susceptible to changes in their clients' environment. The author of this volume selects three provider organizations and uses evidence from these cases to highlight that a link between sourcing capabilities and organizational structure contributes to a positive sourcing performance. His research reveals that providers who are able to adapt to changing client circumstances, whilst establishing a fit, succeed in achieving a sustainable performance.