Clients’ Strategic Choices to Mitigate Their Dependence on Vendors in IT Outsourcing - Resource Dependence and Opportunism Prospects

Clients’ Strategic Choices to Mitigate Their Dependence on Vendors in IT Outsourcing

  Clients" outsourcing strategies noted in the IT outsourcing literature generate varying levels of client dependence on vendors. This study investigates clients" efforts to mitigate such dependence by utilizing multiple vendors. We use the theoretical lenses of resource dependency and opportunism to study this phenomenon. Specifically, we consider degree of outsourcing, duration of contract, and externalization of control as strategic choices that engender vulnerabilities that clients seek to offset by using multiple vendors. This study then considers the basis of the outsourcing relationships, clients" satisfaction with the relationships, and clients" IT workforce size as conditions that induce clients" concerns about vendor opportunism. This study argues that these conditions can exacerbate clients" experience of vulnerability, further encouraging clients" use of multiple vendors. The research model developed is tested in a survey of firms in South Korea. Results suggest a strong impact of outsourcing strategic choices on the number of vendors used by clients. The anticipated moderating effects of opportunism were only weakly supported by the data though. Theoretical and practical implications of the results are considered and suggestions for future research are offered.