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The construction of client organisations and contract structures in outsourcing within dynamic contexts: a longitudinal case study approach

Lee, Jae Yong (2010) The construction of client organisations and contract structures in outsourcing within dynamic contexts: a longitudinal case study approach. PhD thesis, London School of Economics and Political Science.

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This explorative study investigates how bureaucratic public sector client organisations deal with information technology (ITO) and business process (BPO) outsourcing in terms of internal management. To supplement the lack of studies emphasising pre-existing client organisational structure and the contextual and internal changes intertwined with and required for outsourcing, the thesis develops theoretical underpinnings that incorporate change, time, dynamism and context. These consist of a structuration theory-informed formal organisation perspective and a processual analysis-informed multidimensional outsourcing configuration framework. This thesis primarily seeks answers to 'why' and 'how' questions such as: why bureaucratic client organisations are concerned about IT outsourcing or BPO; in consequence, how they construct or change their strategy, organisational arrangements and outsourcing contracts; and, what are the contexts and social processes that let those constructions go forward? Studied by means of a longitudinal case study approach, with elements of comparison, the two cases are the IT outsourcing of the Public Procurement Service of Korea‘s e-government procurement system and the BPO of the Teachers‘ Pension Scheme administration of the British Department for Children, Schools and Families. Through contextual and micro-level analyses, the research found that client organisations appear to work at transforming outsourcing-related strategy, contract structure, and their own organisations—which are mutually interrelated—in the context of five IT governance concerns: strategic alignment, delivery of business value, performance management, risk management, and control and accountability. Institutionalised human behaviours were found to be strongly involved with these processes. The thesis provides rich data on how the organisations decomposed and recomposed existing bureaucratic structures and processes. This thesis also found three standards emerging as rationales for the strategic choices of the client organisations when they moved to outsourcing. These were: core vs. non-core perception of outsourced functions; high vs. low supplier switching costs; and high vs. low variability of business and applied IT. Against expectations, explicit distinctions such as cultural differences between two government environments and differences between ITO and BPO, did not sufficiently explain the core phenomena regarding outsourcing and client organisational change. In practice, core/non-core perception was found to be the key shaper of the outsourcing contracts and client organisation construction, though each outsourcing arrangement emerged as distinctively different in terms of relevant decisions, context, and processes. Overall, the research supports Kallinikos's formal organisation perspective for explaining outsourcing as an enabler of organisational change, and provides an enriched and extended outsourcing configuration framework for disaggregating and studying, and for practitioners helping to manage, outsourcing arrangements in depth.

Item Type: Thesis (PhD)
Additional Information: © 2010 Jae Yong Lee
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
T Technology > T Technology (General)
Sets: Departments > Information Systems and Innovation Group
Supervisor: Willcocks, Leslie P.

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