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Determinants of contract completeness for information technology outsourcing

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Abstract

This study developed and tested a model of the determinants of completeness of IT outsourcing contracts. The model is based on the assumption that the level of contract completeness results from a trade-off between the cost of developing a complete contract and the protection it offers. In contrast with outsourcing in many other sectors, IT outsourcing can be a temporary measure, with the anticipation that activities can be reintegrated in-house. This means that managers have to take into account the time horizon when deciding on the level of completeness of the contract. Results show that firms rely on more complete contracts when outsourcing is seen as a permanent approach. Also, transaction cost theory variables play multiple roles. Uncertainty reduces the level of completeness, while idiosyncrasy reduces partly the use of permanent outsourcing. Demand predictability, representing frequency, plays a dual role, increasing completeness but reducing the likelihood that outsourcing is used as a permanent solution.

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Correspondence to Benoit A. Aubert.

Appendix: Example of questionnaire items

Appendix: Example of questionnaire items

1.1 Asset specificity

Asset specificity is the unique use of the assets required to perform an activity. These assets can be physical or linked to acquisition of skills or knowledge. Their uniqueness means that they have little or no salvage value outside their use for that particular activity.

  

For each activity, assets are

1

Scheduling of operations (applications)

Totally specific

:___:___:___:___:___:___:___:

Totally generic

2

Control of operations (applications)

Totally specific

:___:___:___:___:___:___:___:

Totally generic

3

Production Support Services

Totally specific

:___:___:___:___:___:___:___:

Totally generic

4

Operation of applications

Totally specific

:___:___:___:___:___:___:___:

Totally generic

5

Operation of operating system

totally specific

:___:___:___:___:___:___:___:

Totally generic

6

CPU Operation

Totally specific

:___:___:___:___:___:___:___:

Totally generic

7

Operation of client/server systems

Totally specific

:___:___:___:___:___:___:___:

Totally generic

8

Operation of telecom. software

Totally specific

:___:___:___:___:___:___:___:

Totally generic

9

Printer operation

totally specific

:___:___:___:___:___:___:___:

Totally generic

10

Disk space management

Totally specific

:___:___:___:___:___:___:___:

Totally generic

11

Operating system maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

12

Hardware maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

13

PC maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

14

Network maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

15

Printer maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

16

Telecommunication lines maintenance

Totally specific

:___:___:___:___:___:___:___:

Totally generic

Please indicate the type of outsourcing arrangement your firm has negotiated for this most important contract:

  • Complete divesting (permanent outsourcing)

  • Transition assistance (during a shift from one platform to another)

  • Rehabilitation and return (external assistance to overcome temporary problems)

  • Capability development (development of a new operational expertise in order to return it in-house)

Note: the 3 last forms are considered temporary measures. Complete divesting is considered as permanent outsourcing in the analysis.

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Aubert, B.A., Houde, J.F., Rivard, S. et al. Determinants of contract completeness for information technology outsourcing. Inf Technol Manag 18, 277–292 (2017). https://doi.org/10.1007/s10799-016-0265-5

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