IT & IS Outsourcing Decisions - Advantages & Risks A Study of ISPs in Tehran

Managers in developed countries are increasingly interested in outsourcing as a potential source of competitiveness and value creation. One of the most useful outsourcing activities in service sector is information system/technology outsourcing. This paper is trying to determine the ISP managers’ perceived risks and benefits of IT/IS outsourcing and also the rate of awareness about potential of IT/IS outsourcing. Design/methodology/approach - In order to achieve those aims, we first review the previous literature on this topic and later analyze the results of a survey carried out from 30 ISPs managers in Tehran using the structured interview method.

According to the ISPs under analysis, the main advantage of IT outsourcing is reducing/controlling the general cost while the main risk is the excessive dependence on the provider. Nevertheless, some characteristics of the ISPs (e.g. their size and outsourcing level) can determine to some extent what risks and benefits are more relevant. Originality /value: The conclusions explains that total IT/IS outsourcing can turn out to be a very dangerous strategy, mainly due to the dependence it creates. However, it can enable the ISP managers to reduce and/or control the general cost of building a new IT/IS service. The paper investigates the advantages, risks and some dimensions of IT/IS outsourcing decisions in ISPs of Tehran which can potentially develop the services in-house. Therefore, the “make-or-buy” decision for managers of ISPs requires even more attention to these aspects of IT/IS outsourcing (advantages, risks and decision criteria) than other service companies.