Customers' and service providers' organizational capabilities in successful IT outsourcing: a case study

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Helsinki University of Technology | Diplomityö
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Telecommunications management
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Outsourcing and especially IT outsourcing are current phenomena, and addressing them is often challenging to companies. Thus, outsourcing has drawn much academic interest to itself, and several articles that shed light to best practices in outsourcing have been published. However, many publications have only studied outsourcing from the customer's perspective, thus giving less focus to the role of the IT service provider in outsourcing. This thesis studies the management of IT outsourcing, especially the capabilities required for it, from both the customer's and the service provider's viewpoints. In the focus of the study are the capabilities necessary for the success of the daily activities of IT outsourcing, and also the capabilities or skills required to develop an IT outsourcing relationship towards transformational outsourcing. This study is a constructive, action and case study. For data collection, interviews and SimLab process simulations are used. The theoretical part takes a look at former research on objectives and best practices in outsourcing, the market structure of IT services, supplier selection criteria, and demand-supply chain management. Based on the former research, a construction about capabilities required for outsourcing is built. The construction is tested with two cases, and developed further. The main result of the study is a refined construction that describes the capabilities required from the customer and the IT service provider, as well as their role in the management of daily activities of outsourcing and the development of it. In addition, suggestions are given to the case organizations to develop their outsourcing activities. In order for outsourcing to succeed, it is essential that the internal demand-supply chains of both organizations are in control. Only after this it is possible for the companies to collaborate successfully. Developing the outsourcing relationship further requires "soft capabilities", such as the skill of innovation and motivating employees, from both organizations.
Smeds, Riitta
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Pekkola, Kimmo
IT outsourcing, capabilities, traditional and transformational outsourcing, IT service providers
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