Contracting and Relationships in IT Outsourcing

This chapter is based on a research study on the outsourcing of information technology activities in the United Kingdom. This involved a large survey and a set of detailed case studies based on large and medium-sized organizations. This chapter uses findings from the survey and cases to address the two key issues of contracting and partnering. We show the variety of approaches and perceptions that exist concerning these issues, and conclude that there is much misunderstanding, particularly in relation to partnership. We conclude by creating a framework for helping to identify and examine the interrelationship between contractual arrangements, the required degree of contractual definition, and the characteristics of the area being outsourced. These themes are perennial and continue to be addressed in our subsequent work, particularly in Chapters 4, 10, and 13, our 2001 book that focuses on “the relational advantage” (Kern and Willcocks, 2001), and our 2006 paper on the power of relationships. A collection of papers on relationships also appears in Volume 2 of Willcocks and Lacity (2009). By 1994 the outsourcing of Information Technology (IT) and associated services was a rapidly growing phenomenon in the United Kingdom (UK), the market expanding at 12% per annum to a predicted 1995 revenue of £1.08 billion (Willcocks and Fitzgerald, 1994). A large 1993 example of this continuing trend was the announcement by British Aerospace (BAe) to outsource its Information Technology to Computer Sciences Corporation (CSC) in a ten-year deal worth £900 million, and involving the transfer of over 1,000 IT staff (Evans, 1993).