Centre
for Research on Innovation and CompetitionCentre
for Research on Innovation and CompetitionArchive
26-27 November 2003
Damian Grimshaw and Marcela
Miozzo
(Manchester School of Management, UMIST)
Abstract
This paper reports the results of case-study research on IT outsourcing in the UK and Germany. In both countries IT outsourcing has grown at an exponential rate and has been associated with strong cost pressures, highly formalised contracts and the transfer of IT staff to retain tacit skills. But there are significant differences. First, the process of IT outsourcing follows two quite different trajectories of organizational forms in each country, with greater use of joint ventures in Germany than in Britain; this raises questions regarding the differential ability of clients to control access to tacit skills and knowledge. Secondly, the characteristics of inter-organisational relations differ: strong norms about technical standards in Germany enable 'smart' clients to exploit the market incentives of multi-supplier contracts, as well as to manage IT contracts proficiently; in the UK organisations rely on 'partnership' relations, but the scope for conflict and opportunistic behaviour is high due to problems of low technical knowledge. These country differences impact upon the distribution of performance gains (between client and supplier) associated with IT outsourcing.
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