Book Review

Reviewed by: Vishal Midha, Ph.D.

Information Systems and Outsourcing Studies in Theory and Practice

Leslie P. Willcocks and Mary C. Lacity

Palgrave Macmillan, December 2008, 431 pages ISBN: 9 78-0-230-2053 7-6

This book is a set of readings on Information Systems Outsourcing resulting from more than 20 years of experience of the editors. Most of the chapters are updated versions of research work previously published in either books or scholarly journals. Altogether there are 15 chapters organized under two sections. The first section primarily stresses on the importance of critically examining theories borrowed from various fields to study IT outsourcing. The second section focuses on outsourcing practice and is based on over 500 case studies. This section evaluates the processes and practices associated with domestic, offshore, and global sourcing of IT services from both, client and supplier perspectives

As the editors mentioned, the focus of the theories section is not on explaining which theories to adopt or how many theories to adopt, rather it focuses on the need to critically examine theories developed in other disciplines before importing them and applying them to IT contexts. After a brief introduction to the topics in Chapter 1, the editors challenge the applicability of Transaction Costs Economics (TCE) in the IT outsourcing context in Chapter 2. Using Hegelian approach on the data collected from 145 interviews from 19 organizations in the United States and 21 organizations in the United Kingdom, the authors showed that often the large proportion of the outsourcing decisions violate many TCE assumptions. Using the discussion on residuals and anomalies in the decision based on TCE, the authors strongly suggest supplementing TCE usage with other theories and developing IT sourcing theory based on assumptions of general case of IT sourcing.

Chapter 3 also uses TCE framework to analyze two different sets of data from two different time periods. However, the results of the studies were different. By analyzing the differences in results, the authors drew out four major lessons. The primary finding is that IT outsourcing decision makers learned through their

Book Review

mistakes in the 1980s and became better at crafting more cost effective contracts in mid 1990s.

Chapter 4 examines the four drivers of Domberger's Theory of the Contracting Organization, namely special'ization, market discipline, flexibility, and cost savings, in the context of IT outsourcing. Using data from 235 Australian IT leaders, the authors supported specialization and market discipline as the determinants of IT managers' satisfaction with IT outsourcing. However, as opposed to common belief, the data failed to show flexibility and cost savings as the significant determinants. Interestingly, the book editors do not provide any potential reasons for such unexpected results.

Chapter 5 moves away from economic viewpoint and focuses on understanding operational characteristics of outsourcing relationships. Using Nordic School's interaction approach to include client and supplier perspective, the authors identified eight ways in which involved stakeholders interact.

The section on practice begins with Chapter 6, which is a revision of already published work on myths, metaphors, and realities. In the original work, the authors primarily suggested that clients need to sign better contracts. In this study, the authors have found that the clients have become much better at contracting. Additionally, the number of supplier options has increased exponentially.

Chapter 7 discusses a framework, originally developed 12 years ago, on outsourcing decision making. The framework considers business, economic, and technical factors and finds support from 11 major corporations. Chapter 8 and 9 discuss issues of knowledge created during outsourcing process. More specifically, they discuss about how knowledge is created and protected in social context and how it is transferred tolfrom suppliers. Considering the vast amount of knowledge that is created during outsourcing processes, these chapters provide useful understanding on managing such knowledge.

Chapter 10 presents twenty common outsourcing practices and highlights the importance of those in domestic and offshore outsourcing. On the other hand, Chapter 11 discusses practices specific to CIOs and includes how to assess supplier capabilities, configure supplier options, and bid effectively. Chapter 12 focuses on client-supplier relationship and suggests that a high level unit of analysis does not fully capture the complete stakeholder landscape. By analyzing at micro levels for both client and supplier stakeholders, the authors explain the dynamics of complex relationships among various stakeholders.

Chapter 13 provides a summary of best, worst, and emerging sourcing practices from the authors' studies of 543 large and small organizations, and suggests that customers must become adept at managing four continual processes to successfully exploit IT outsourcing: (i) assess in-house IT portfolio, (ii) evaluate market options,

Book Review

(iii) align expectations in contracts, and (iv) continually manage supplier relationship. The main message of this chapter is that "all outsourcing requires continual and significant in-house maintenance". The authors then further identified and evaluate nine core IS capabilities clients need in-house, to effectively manage IT in the last chapter (chapter 15) of the book.

Chapter 14 focuses on the supplier side and discusses capabilities both clients and suppliers need to manage globally dispersed expertise. Based on a detailed study of how one outsourcing vendor built expertise management systems to ensure diffusion of client knowledge even when the people who possess the knowledge move on, the authors propose a set of eight practices for successful management of expertise.

In summary, this book is substantial, running to over 400 pages, and provides a very useful collection of papers that together cover much, although by no means all, of the academic research in the area. Its strengths lie primarily as a research text. The discussion of the theoretical underpinnings to the research projects is extremely readable, thoughtful and of use to anyone interested in understanding IS decision- making process.

Its weaknesses lie in the practicality. This book is very useful for the IS academia interested in outsourcing. However, its practice part is not written for practitioner audience. It follows the same style of writing and presentation throughout the book. The book certainly has good advice for practitioners, but any practitioner would probably give up before finding them. The book also fails to consolidate all its theoretical and practitioner viewpoints together. While studying the various sourcing phenomenon fiom different viewpoints increases our understanding of the topic, a comprehensive framework consolidating the ideas generated in the field could be used to assess, compare and contrast previous results, and build on for future analysis. Even with these limitations, the editors have successfully integrated a collection of studies that provide a pluralistic perspective of advances in the area of IT outsourcing, and this book is a noteworthy recommendation for all those interested in the area of outsourcing.

Vishal Midha is an assistant professor of Computer Information Systems at the University of Texas- Pan American. He has a Ph.D. in Information Systems from the University of North Carolina at Greensboro. His current other research interests include open source software development, information piracy concerns, and knowledge management. He has published in Communications of AIS, Electronic Markets, Journal of CIS, and many national and international conferences including ICIS, AMCIS, DSI, and GITMA. Presently, he also serves as an Associate Editor for Case Studies in International Journal of Information Security and Privacy.