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IT outsourcing – advantages and risks: a study of ISPs in Tehran

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Managers in developed countries are increasingly interested in outsourcing as a potential source of competitiveness and value creation. Outsourcing has also attracted more attention in the complex field of New Service Development in order to simplify this process. One of the most useful outsourcing activities in service sector is IT/IS outsourcing. Despite the considerable growth of information system/technology outsourcing in recent years, this trend is the object of strong criticism. In order to analyze the customer – supplier relationship in IT/IS market, several subjects should be clarified. This research is going to determine the customers perceived risks of IT/IS outsourcing and also the rate of awareness about potential of IT/IS outsourcing while the customers are Iranian Internet service providers (ISPs) and the suppliers are third parties who provide different IT/IS services for their customers. The research is performed through a structured interview from 20% of ISPs managers in Tehran. The results show that the concerns for any IT/IS outsourcing decision is mainly due to “An excessive dependence on the provider”, “Security issues”, “Strategic alliance failure”, “Hidden costs in the contract” and “Not achieving to desired customization”. While 93.3% of respondents are aware at least from one advantage of IT/IS outsourcing. The major advantages of IT/IS outsourcing from ISP managers point of view were “Reducing/Controlling the general cost”, “Overcoming lack of internal resources” , “Shortened time to market”, “Focus on core competence”, “General risk reduction”, “Improving service quality” and “Strategic repositioning”. Nevertheless, there were some characteristics of ISPs (mainly their size) which determine their perceived risks and benefits.

Author: Moghimi, Bijan

Source: Luleå University of Technology

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