The Outsourcing Industry has grown at a swift pace and evolved over time, and the Global IT Outsourcing market has shown signs of a steady growth. The domestic IT Outsourcing market is also no exception. The domestic IT Outsourcing industry is characterized by a bigger share of a captive market involving conglomerate affiliates, thus becoming the subject of criticism over the vitality of the domestic IT Outsourcing market and competitive edge. However, there are not many studies based on the characteristics of the domestic market, and the studies of the Korean market should adopt different measurement tools and methods from those of the foreign IT Outsourcing market. This paper analyzed the outcome of a survey of 60 client companies, who have introduced IT Outsourcing, based on the affiliation type of IT Outsourcing suppliers. It found that political and cognitive factors have varied according to the affiliation type of IT Outsourcing suppliers. It is significant that the study has verified the relationship between Outsourced companies' choice of IT Outsourcing suppliers and performance of IT Outsourcing.
Nowadays many leading companies realize the necessity to increase management efficiency, reexamine external risk factors, and put in much more resources for their own core competency than before in order to survive in aggressive waves of globalization. Recently in order to respond to the rapid development of technology, the increasing complexity of business processes, and continuously changing customers‟ requirements, "outsourcing‟ that entrusts outside companies for other jobs than core competencies is broadly selected as a management innovation tool. The concept of IT outsourcing also has evolved from merely having a contractor to having a strategic partner in the area of IT for a client.
[...] K.; A Study on Factors Which Affect Implementation Performance of IS Outsourcing in Korea, Academic thesis, Graduate School of Business Administration, Ewha Womans University, South Korea Kim, Y. G . and Lee, J. N.; IS Outsourcing on Strategies for Conglomerate Firms with Its Own SI Company, Korean Academic Society of Business Administration, Vol. pp 97- King, William R. and Malhotra, Y.; Developing a framework for analyzing IS sourcing, Information & Management, Vol. pp 323-334, September 2000. Lacity, M. C. and Hirschheim, R.; The Information Systems Outsourcing Bandwagon, Sloan Management Review, Vol. [...]
[...] Therefore, the research hypothesis that there is a difference in decision factors by the type of IT outsourcing providers is supported and the hypotheses on cognitive and political factors were accepted Multivariate Analysis of Variance (MANOVA) To test Hypothesis the Multivariate Analysis of Variance (MANOVA) was performed to analyze the difference in IT outsourcing effect by the type of providers. MANOVA provide a data analysis method to test if two and more dependent variables differ between groups. As a result, it was found that only economic effect significantly differs by the type of outsourcing provider at the significance level of .1. [...]
[...] In short, previous research on IT outsourcing performance can be divided into the one group based on satisfaction and the other one that measures financial performance. We believe that outsourcing effects (strategic, economic, and technological effects) provide the basis to evaluate not only the outsourcing project itself but also various intangible achievements made for the company after outsourcing was introduced. Thus, in this study, these are considered as the indexes to measure IT performance Research Model and Hypothesis 3.1 Research Model The purposes of this study are as follows: First, it will confirm if the form of provider (subsidiary or non-subsidiary) has an effect on any decisions of IT outsourcing. [...]
[...] Hypothesis Political variables have the more effect on selecting subsidiaries as IT outsourcing providers than non-subsidiaries IT Outsourcing Performance For successful outsourcing of IT service, the relationship with an outsourcing provider is highly critical (Huh, 1997). In other words, with commendable mutual communication and high levels of cooperation and trust, a client company‟s requirements will be well understood and organizational members‟ expected IT service level will increase, resulting in IT outsourcing success (De Brabander and Thiers, 1984). When a Korean company selects an outsourcing provider, the IT service companies exists within a group corporation has an important effect on making outsourcing decisions. [...]
[...] Nonetheless, Loh and Venkatraman (1992a) argued that IT cost structure has a close relationship with outsourcing decision, and Palvia and Parzinger (1995) explicated that the difficulty in IT cost estimation, the increase in S/W maintenance cost, and the increase in data processing costs were main reasons that lead companies to consider outsourcing. Economic reasons that significantly affect outsourcing decision will influence the companies that plan outsourcing, regardless of the results of outsourcing. Lee (1996) showed that when service quality is same, the service provided by external companies (non-subsidiaries) is preferred to that of internal departments (subsidiaries), and he contended that as the companies specialized in IT outsourcing usually have accumulated experiences in relevant jobs as well as necessary equipments, the costs for H/W and training costs, and labor costs can be saved and thus they are much more effective internal departments. [...]
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