Interaction quality and the influence on offshore IT outsourcing success

Abstract

Information technology (IT) is one of the most outsourced functions by many companies in the world. Outsourcing does not only involve two companies from the same countries, but also from the different countries that is called as offshore outsourcing. There are critical success factors for dealing with outsourcing and one of them is related to relationship management between provider and client. Therefore to achieve the success of offshore IT outsourcing requires both sides to have good interaction quality. This paper will investigate the influence of interaction quality on outsourcing success from the perspective of IT provider. After a deep related literature review, the model of interaction quality is brought forward. The model consists of interaction quality as a predictor of the outsourcing success. Interaction quality includes inter-organizational information exchange, coordination, and participation. We use the Partial Least Squares — Structural Equation Modeling (PLS-SEM) to validate the proposed model with survey data of Indonesian IT providers. The result shows that interaction quality has a strong impact on outsourcing success. Information exchange has a strong impact on coordination and a moderate impact on participation. Participation has a low influence on coordination.