Revealing hidden motives behind outsourcing decisions: a case study relating to public information technology services
by Jesse Seppälä; Kalevi Kyläheiko; Ari Jantunen
International Journal of Procurement Management (IJPM), Vol. 7, No. 5, 2014

Abstract: We examine outsourcing of IT services within the Finnish public sector. The goal is to construct a flexible framework that reveals the hidden motives of buyers and sellers when there are no real competitive outsourcing markets. Since outsourcing decisions boil down to the full costs minimisation of purchasing, we will start from the transaction cost analysis (TCA). This static model is, however, too limited when trying to evaluate the costs and benefits of the real world outsourcing. Therefore, we extend TCA taking into account also transaction benefits. Then, we outline the impact of an outsourcing decision as an empirical case study where the transaction-related (dis)advantages are systematically analysed based on questionnaires. The managerial lesson is that the hidden motives of buyers and sellers are different and it is of importance to recognise the differences.

Online publication date: Wed, 10-Sep-2014

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