IT outsourcing: an assessment of relative failure factor complexity

Abstract

The paper deals with the factors affecting the failure of IT outsourcing and introduces new concept referred to as relative failure factor complexity (RFFC). The RFFC takes into consideration the gap in perception of both outsourcing partners; customer organisations and IT providers. The paper considers responses from seven organisations (customers) facing problems with their IT outsourcing and five IT providers. Structured interviews with senior managers in these firms have been conducted. Results show that there are discrepancies between the customers and providers on their perception of critical failure factors affecting the IT outsourcing. The paper concludes that there are mainly three critical failure factors with high RFFC that play a crucial role on IT outsourcing failure. These factors are incompatible cost/ benefit trade off, high hidden costs, and low response rate.