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An empirical study on the relationship between outsourcing determinant factors and outsourcing performance in Korea

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  1. Abstract
  2. Introduction
  3. Literature review
    1. IT outsourcing: Definitions and types
    2. IT outsourcing decision variables
    3. IT outsourcing performance measurements
  4. Research model and hypothesis
    1. Research model
    2. Research hypothesis
    3. Operational definition of variables
  5. Hypothesis tests and result analyses
    1. Data collection and sampling methods
    2. Analysis of measurement model
    3. Hypothesis test and data analysis
  6. Conclusion
  7. References

The Outsourcing Industry has grown at a swift pace and evolved over time, and the Global IT Outsourcing market has shown signs of a steady growth. The domestic IT Outsourcing market is also no exception. The domestic IT Outsourcing industry is characterized by a bigger share of a captive market involving conglomerate affiliates, thus becoming the subject of criticism over the vitality of the domestic IT Outsourcing market and competitive edge. However, there are not many studies based on the characteristics of the domestic market, and the studies of the Korean market should adopt different measurement tools and methods from those of the foreign IT Outsourcing market. This paper analyzed the outcome of a survey of 60 client companies, who have introduced IT Outsourcing, based on the affiliation type of IT Outsourcing suppliers. It found that political and cognitive factors have varied according to the affiliation type of IT Outsourcing suppliers. It is significant that the study has verified the relationship between Outsourced companies' choice of IT Outsourcing suppliers and performance of IT Outsourcing. Nowadays many leading companies realize the necessity to increase management efficiency, reexamine external risk factors, and put in much more resources for their own core competency than before in order to survive in aggressive waves of globalization. Recently in order to respond to the rapid development of technology, the increasing complexity of business processes, and continuously changing customers? requirements, ?outsourcing? that entrusts outside companies for other jobs than core competencies is broadly selected as a management innovation tool. The concept of IT outsourcing also has evolved from merely having a contractor to having a strategic partner in the area of IT for a client.

[...] K.; A Study on Factors Which Affect Implementation Performance of IS Outsourcing in Korea, Academic thesis, Graduate School of Business Administration, Ewha Womans University, South Korea Kim, Y. G . and Lee, J. N.; IS Outsourcing on Strategies for Conglomerate Firms with Its Own SI Company, Korean Academic Society of Business Administration, Vol. pp 97- King, William R. and Malhotra, Y.; Developing a framework for analyzing IS sourcing, Information & Management, Vol. pp 323-334, September 2000. Lacity, M. C. and Hirschheim, R.; The Information Systems Outsourcing Bandwagon, Sloan Management Review, Vol. [...]

[...] Therefore, the research hypothesis that there is a difference in decision factors by the type of IT outsourcing providers is supported and the hypotheses on cognitive and political factors were accepted Multivariate Analysis of Variance (MANOVA) To test Hypothesis the Multivariate Analysis of Variance (MANOVA) was performed to analyze the difference in IT outsourcing effect by the type of providers. MANOVA provide a data analysis method to test if two and more dependent variables differ between groups. As a result, it was found that only economic effect significantly differs by the type of outsourcing provider at the significance level of .1. [...]

[...] This study could not completely confirm the correlation between the decision variables of IT outsourcing providers (economic, technological, political and cognitive factors) and the IT outsourcing performance (economic, technological and strategic effects and overall satisfaction). However, it was found that political factor and overall satisfaction that showed significant difference between two groups have a negative correlation, while cognitive factors and overall satisfaction have a positive correlation. This means that political variables that affect the selection of subsidiaries as providers do not have a positive influence on client companies? IT outsourcing performance. [...]

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