California Management Review

Abstract

The conventional wisdom is that companies should never outsource core functions. This study of thirty-four large companies, which outsourced for at least two years, demonstrates that outsourcing can be successful even when information systems are viewed as core functions. However, outsourcing negotiations must reflect the role of the company performing the outsourced functions and the nature of the outsourced work. A critical key to success in outsourcing arrangements lies in having tight contracts, even when the outsourcing vendor is viewed as a strategic partner or the IS function is considered to be core. This article offers prescriptions for writing contracts and creating balanced arrangements to enhance outsourcing success.

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