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Understanding Information System Outsourcing Failure: Lessons from a Case Study

Despite increased corporate efforts to outsource information systems work, many firms are faced with disappointments and failures. This paper examines the key issues in IS outsourcing failures. Integrating insights from transaction cost economics and social exchange theories, it presents an exploratory framework for understanding the dynamics underlying IS outsourcing failures .It discusses a case study of a failed outsourcing arrangement between a leading North American retailer and a technology vendor, illustrating issues that ultimately led to termination of the multi-year multi-million dollar agreement.. Insights from the case study are utilized to frame propositions and to develop an exploratory framework for understanding IS outsourcing failure.