A Study Of IT Outsourcing Service And Risk Avoidance In Service Execution Process

Acquiring part or most of IT service from exterior entity is a common arrangement in business today while most of the relevant literature is focused on client needs given that IT outsourcing are constantly concerned by academics. Though IT Outsourcing is bound up with IT Outsourcing Service (IOS), they are distinct from each other, in that the former is the demand of client, while the latter is the service of provider. The basis of IOS and risk avoidance in service execution process are studied in this dissertation poses vender's view contrasting current status of insufficiency research on these topics. Main findings of the dissertation are outlined as follow: 1) The substance of IOS research is founded for further works. Definitions of IT Outsourcing Service are given both in a broad sense and a narrow sense. Connotative of these two definitions are compared with IT Service which referred by domestic industry professionals and Computer Service which referred by foreign government statistic agencies. Taxonomy standard is proposed, followed by IOS classification based on a three dimensional model. Service provider cases are depicted and studied. A framework is constructed to map strategy importance of IOS for diverse providers. 2) Factors related to strategic IOS decisions are identified through positive study. Information of 157 Chinese software enterprises, retrieved from their cooperate websites, is unscrambled accord content analysis approach. Data statistic reveals key factors influence decision-making about whether providing IOS or not are: software development process formalization, technical competences other than software development and company primary services. Geographic location and foreign direct investment are identified as other factors that have an effect on offshore service decision. Other results are also discussed, followed by reasoning. 3) Sources of risks are identified after defining terms of Service Execution Process Risks and Risk Avoidance. Summarizing relevant research, this dissertation contends it would be difficult if not impossible to enumerate all the factors or even significant ones inducing risk. Further, this dissertation argues that sources of process risks are service provider itself, client and service transaction, and a source resisting risk avoidance model is proposed based on this idea. 4) Directing at customer rooted risks, the dissertation proposes a thought of vender dominating client risk avoidance. Risk source analysis reveals that risks client encountering could transferred to vender. So this dissertation argues that vender should and is able to take active actions to reduce client risk exposure at vender dominating setting. Research indicated such setting is a viable ——even common arrangement. Practical tactics materializing such actions are proposed. 5) In view of transaction rooted risks, a model of risk avoidance base on Service Level Agreements (SLAs) is proposed. A model formulating SLAs clauses is proposed. This dissertation argues that the role of SLAs played in transaction risk avoidance could be discussed through three validity questions. Non-SLAs charge model is developed, found that information asymmetry is the source of transaction risk vender incurring. A model of Risk avoidance based on SLAs is developed. All three validity questions are answered positively based on the relation of parameters derived from the model. So validity of the model are proved theoretically, limitations are discussed either.