Critical Success Factors of Information Technology Outsourcing for Emerging Markets

Abstract

Outsourcing has gained popularity as several large U.S. companies in the 1980 s began delegating IT work to foreign firms. In outsourcing, one party (customer) asks another party (vendor) to do a particular job. Outsourcing has its own advantages, like reducing the cost and time and increasing performance and satisfaction. This study has focused on the critical success factors in information technology outsourcing for the emerging market and has considered the perspectives of the vendor. A snowball sampling technique was used to generate quantitative data among the respondents inside Kathmandu valley and variables were drawn from the available literature. Respondents included outsourcing vendors, freelancers, consultants and policymakers. Data were properly tested for reliability using Cronbach’s Alpha and results were validated using convergent and discriminant validity. The analysis included Structured Equation Modeling and Estimation was done using maximum likelihood and partial least squares. The study identified 21 critical success factors for the emerging market under seven categories: System quality, communication quality, service quality, system use, satisfaction, individual benefit and organizational benefit which is the main contribution of the paper. It is suggested that IT outsourcing vendors focus on these factors, policymakers implement new strategies to establish their presence in global outsourcing industries and researchers incorporate these variables in their future research.