Maturing IT Outsourcing Relationships: A Transaction Costs Perspective

Outsourcing of information technology truly started in the early nineties. This market has grown substantially since that time. A substantial part of this market is application management. This publication provides lessons learned based on six case studies. Three historic case studies describe outsourcing engagements in the 1990s, and three recent case studies describe outsourcing engagements in the 2000s. By comparing the two, the transformation of service providers into service integrators becomes clear. This transformation resulted in substantial reductions in the total cost of ownership by investing in retained organization, resulting in an increase of the coordination costs, improved performance and more predictable cost patterns, which in turn resulted in a decrease of the production costs.