Relationship or contract? Exploring the key factor leading to IT outsourcing success in China

Abstract

Purpose – Effective management of IT outsourcing continues to be a challenge to organizations today. Organizations in China suffer from even bigger problems than other regions of the world. The IT outsourcing market is in its infancy and the outsourcing practice is still at its initial stage. Regarding to the outsourcing management issues, the literature has explored the role of either the relationship or contract in governing IT outsourcing success. However, few efforts have been paid to investigate the effects of both relationship and contract on IT outsourcing success from a holistic view. The paper aims to discuss these issues. Design/methodology/approach – This study develops a conceptual model and empirically tests it through a cross-sectional survey conducted in five big cities of Mainland China. Findings – The data analysis results identified the dimensionalities of relationship, contract and IT outsourcing success and proved the causal relationships between these three constructs. Originality/value – This research re-emphasizes the importance of relationship in IT outsourcing success and the fundamental role of contract in developing a sound relationship. It also gives some implications on how to evaluate IT outsourcing success in China, an emerging market for IT outsourcing.