eThesis - School of Business electronic theses

IT outsourcing transition is the implementation of the new way of operating and it is part of any IT outsourcing relationship. It may follow initial outsourcing of in-house IT, switching outsourcing providers, or in-housing outsourced IT back from the provider. Transition sets the tone for the outsourcing relationship and researchers have suggested that failed transitions are the root cause of unsuccessful outsourcing relationships in majority of the cases. Furthermore, if the transition is planned and executed unsuccessfully, it may even endanger the business continuity of the client. Despite of the significance of the transition in the outsourcing relationship it has received limited academic attention. No research has especially focused on how the different outsourcing settings and the decisions made in the pre-delivery phase of IT outsourcing lifecycle contribute to the success of the transition. During the pre-delivery phase of the transition with the new IT outsourcing provider, important foundations for the whole outsourcing relationship are laid which often cannot be changed later.

This thesis aims to provide a fresh viewpoint to the switching of IT outsourcing providers discussing how different outsourcing settings and external factors affect transition planning and how these decisions affect transition success when client is switching outsourcing providers. Further, this thesis aims to clarify what is high speed switching of outsourcing providers and when this type of transition should be used.

To clarify the planning process when the client is switching outsourcing providers, the literature covers information technology outsourcing, different forms of IT outsourcing settings and how they affect the success of the transition. Further, the IT outsourcing lifecycle, project management and IT outsourcing transition management are discussed. To elaborate on the IT outsourcing lifecycle and moreover, the transition planning process, a traditional view of the IT outsourcing lifecycle model is developed from earlier studies. This model is then compared to a suggestive high speed transition model supported by the findings of a single case study.

The results of the study indicate that the complexity of the outsourcing setting is not directly related to the success of the transition and that the use of high speed transition model for switching outsourcing providers is beneficial under certain conditions. To succeed with the high speed transition model, it is vital that there is high level of trust between the involved parties, the outsourced activities are not related to the core business of the client and there is no extensive transformation needed between the two settings. Thus, the cost of delaying the start of the transition without a final plan, agreement on the success measures and the service contract is considered as a higher the risk than starting the work without having them finalized. This view links transition management to agile practices and adds to the traditional view of switching IT outsourcing providers where the success measures and the service contract result from thorough planning in the pre-delivery phase that includes lengthy negotiations and extensive due diligence and the transition execution only starts after the contract is well defined and signed.