IT Outsourcing as an Innovative Strategy: The Experience of a Malaysian Bank (original) (raw)
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Information Technology Outsourcing is embraced by Malaysian government and the world for the objectives of becoming information developed societies. Therefore, it is important to investigate the challenges faced by IT outsourcing companies (MDEC & MSC, 2011). The aim of this research is to investigate the challenges faced in IT outsourcing. This study is empirical, and it applied quantitative research method. Data were collected from 107 respondents using questionnaire. The IT managers or employees with good knowledge in IT outsourcing were the respondents. Data were analyzed using descriptive statistics. The findings show that lack of highly skilled IT employee, lack of experience in outsourcing relationship, security issue, unspecified cost in the outsourcing contract, low management capacity, inadequate resource for human and technological change and ethnic difference are the IT outsourcing challenges faced by MSC IT outsourcing companies in Selangor of Malaysia.
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The impact of Kodak IT outsourcing contract spread across the global. The practices have also been adopted in Malaysia since 1990s but were not widely publicized until massive public sector computerization projects and automation of financial systems after Asian financial crisis in 1997. Thus, many service providers, including world-class firms, providing ITO business models can be found operating in Malaysia. They provide both IT asset and services outsourcing. ITO models evolve from traditional to innovation phase in 2010 onwards. One of the innovative models in Malaysia is the global offshore service delivery model which is based on four pillars, namely: Experienced Leadership; Global Best Practice; Human Capital; Domain Knowledge. To be able to compete globally, Malaysia has equipped its companies with higher capabilities and competencies via international certifications and continuous skills developments. Several advantages proposed by Malaysia include: economic stability, political stability, multi-lingual, world-class infrastructure, affordable lifestyle, value propositions and many others. In this paper, we present the detailed views of a senior executive management on two open-ended in-depth interviews, literature and document reviews, secondary sources and one CEO roundtable discussion held in International Islamic University Malaysia. This paper contributes to the practice as well as the IT outsourcing literature.
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The Information Technology (IT) outsourcing poses a potential job loss threat to IT professionals. This study investigated the perception level of employees directly involved in IT outsourcing, deals in an effort to relate these perceptions to factors identified in earlier studies. The following human resource factors associated with outsourcing were evaluated: skills, control, job security and job satisfaction. The study uses an adopted model from a previous study and evaluated four hypotheses that contended differences in perception in terms of demographic factors. The study used survey questionnaire to collect primary data from the entire population of 52 permanent employees of IT department of a leading private bank. The collected data was analyzed by the use of descriptive and inferential data analysis methods. It was revealed that permanent employees in this organization had a negative perception towards IT outsourcing. Further the results show employeesbelongs to different age levels have significantly different level of perception on IT Outsourcing.
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Information Systems (IS) functions and whole IS departments are being outsourced in industries where the IS functions have been considered 'core' to the success of that business. Why and how senior management came to make these decisions is the focus of this article. It explains the motivations behind Information Technology (IT) outsourcing when popular alliance theories, such as transaction cost theories, game theory and joint-venture alliance theory suggested firms would not outsource an entity if core competency would be lost. Seven case studies were used to investigate the IT outsourcing phenomenon in the observed 'alliance-like' relationships emerging in the banking industry in the early 1990s. Inductive theory generating research was undertaken in this work following Yin's (1984, 1989) guidelines of multiple case replications to ensure rigorous and systematic data collection procedures. Before the case studies were conducted, 40 preliminary interviews were undertaken with managers of companies that were and were not involved in IT outsourcing contracts to explore the theorized factors of interest drawn from the literature, to develop the propositions, and to refine a structured interview guide. These preparatory steps led into the initial case study, and the literal replications of the proposed factors to confirm the patterns found. A theoretical replication based on conflict resolution was then undertaken to expose greater variation in conflict with the outsourcing relationships to contrast the initial patterns found. The results suggest that financial motivations underlie many IT outsourcing decisions, and unresponsive IS departments are accelerating the pace of the outsourcing process. Within this research, IT outsourcing was found to have profound effects on the expenses for the banks. However, contrary to conventional wisdom, IT outsourcing is taking place within firms and industries which utilize IS activities that are considered core competencies. Several strategic motivations were presented that may explain this management decision. Firms were undertaking IT outsourcing to change the organizational boundaries, to restructure, to mitigate technological risk and uncertainty, to access emerging technology, to manage the IS department better, and to link business and IT strategy.
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This paper presents a review of existing theoretical perspectives and empirical work on strategic IT outsourcing. By presenting the main findings of various recent studies and elaborating on current research gaps it conveys a picture of the past research, the present findings and the future applications of IT outsourcing. Prior research has generated theoretical insights and largely qualitative evidence on IT outsourcing. While quantitative studies remain sparse, limited to decisionmaking and performance, there is a lack of quantitative empirical research examining outsourcing processes more comprehensively. This paper outlines a simple, yet integrative process model and develops propositions, which serve to integrate and compare theoretical strands, to evaluate existing empirical research and to stimulate new avenues of empirical research.