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Contract Renewal Decisions in IT-Outsourcing: A Survey in the Netherlands

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Shared Services and Outsourcing: A Contemporary Outlook (Global Sourcing 2016)

Part of the book series: Lecture Notes in Business Information Processing ((LNBIP,volume 266))

Abstract

Increasingly, outsourcing companies decline to renew their contracts automatically at the end of their duration [1, 2]. Furthermore, only a very few contracts are renewed in sole-source contract negotiations. Switching IT outsourcing suppliers is becoming more common [3]. Organizations send out Requests for Proposal instead and may select a new provider for their Information Technology (IT) services. The costs of selection and knowledge transfer processes, switching costs, are substantial [4–6]. Service delivery continuity is also under pressure when a transfer to a new provider is made [8, 9]. What are the considerations in contract renewal decisions for IT services? The findings presented will be useful for client companies facing contract renewal decisions. In the current, increasingly mature outsourcing market, qualitative factors are considered most important in deciding contract renewal versus switching suppliers, as outsourcing companies are now well capable of negotiating a market-conform price [10]. In this research project, we focus on qualitative as well as financial factors related to switching suppliers. Furthermore, termination provisions in contracts are important. How can service delivery continuity be assured while switching your supplier? This results in a framework for contract renewal decision making in IT outsourcing containing motives, switching costs, risks and contract good practices.

This research presents the findings of a survey on contract renewal decisions in IT outsourcing. Dutch-based customer organizations participated in this research project. The data for this research is collected via survey.

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Notes

  1. 1.

    The mission of ICT Media is to facilitate Dutch IT decision makers. The community of ICT media consists of Chief Information Officers and their direct reports. The community is supported by a knowledge portal and business magazines. ICT Media also regularly facilitates round tables. ICT Media has an active community that represents the Chief Information Officers’ community in the Netherlands.

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Acknowledgements

The author would like to thank Rob Beijleveld, Diego Nendissa and Arnoud van Gemeren from ICT Media (www.ictmedia.nl) for inviting the members of the ICT Media community to participate in the survey and for facilitating the execution of the survey.

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Authors and Affiliations

  1. TIAS School for Business and Society, Warandelaan 2, PO Box 90153, 5000 LE, Tilburg, The Netherlands

    Erik Beulen

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  1. Erik Beulen
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Correspondence to Erik Beulen .

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Editors and Affiliations

  1. Aston Business School, Aston University, Birmingham, United Kingdom

    Julia Kotlarsky

  2. Loughborough Universiry , Loughborough, United Kingdom

    Ilan Oshri

  3. London School of Economics , London, United Kingdom

    Leslie P. Willcocks

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Beulen, E. (2016). Contract Renewal Decisions in IT-Outsourcing: A Survey in the Netherlands. In: Kotlarsky, J., Oshri, I., Willcocks, L. (eds) Shared Services and Outsourcing: A Contemporary Outlook. Global Sourcing 2016. Lecture Notes in Business Information Processing, vol 266. Springer, Cham. https://doi.org/10.1007/978-3-319-47009-2_10

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  • DOI: https://doi.org/10.1007/978-3-319-47009-2_10

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  • Publisher Name: Springer, Cham

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  • Online ISBN: 978-3-319-47009-2

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