It workers on outsourcing: what about me? What about the profession?

Brooks, Nita G. ; Miller, Robert E. ; Korzaan, Melinda L. 等

INTRODUCTION

IT outsourcing is not by any means a new phenomenon. Outsourcing of IT functions can be traced back to the early 1960's when EDS took over the data processing functions of two large companies: Frito-Lay and Blue Cross (Lacity & Hirchheim, 1993). Loh and Venkatramen (1992) coined the phrase "Kodak effect" to refer to the impact of Kodak's arrangement to turn over the majority of their IT operations to IBM, Businessland, and DEC on IT outsourcing in general. Since that time, IT outsourcing has grown and is considered a viable and strategic option for organizations. Organizations use different sourcing strategies ranging from total outsourcing to selective outsourcing. Firms continue to outsource "an increasingly large range of and depth of services" (Barthelemy & Geyer, 2004, p. 91), this proliferation of IT outsourcing is not anticipated to slowdown in the near future (Computer Economics, 2006).

A current trend is also emerging in which medium and small-sized companies are jumping on the IT outsourcing bandwagon. While large organizations have historically outsourced their IT functions, today small firms are progressively farming out IT operations to companies that provide a range of options for the smaller scale business. "Overall, small and medium-sized businesses are forecast to make up two-thirds of the outsourced help-desk market in 2011" (Tam, 2007, p. B.5). Therefore, the effects of outsourcing are touching an increasingly wider range of companies and industries.

Economic indicators and uncertainty have further perpetuated the outsourcing trend (Business Wire, 2008). Many companies have come to believe that outsourcing is good for the bottom-line. Chrysler, a company which has struggled for years, has taken this idea to heart by incorporating additional IT outsourcing as part of its plan for recovery (Overby, 2008). While many companies are outsourcing to domestic firms, a growing number have decided specifically to outsource offshore. Companies are driven to offshore outsourcing because they have become convinced it is necessary in order to be competitive in the global economy (HR Focus, 2008). The demand for offshore outsourcing is so great that IBM "announced plans to invest $6 billion in India to expand its workforce there" (Songini, 2007, p. 1).

Given the significance of outsourcing, it is not surprising that the phenomenon has been widely investigated by IT researchers. Studies have examined why organizations outsource and the motivations behind outsourcing arrangements (Lacity & Hirschheim, 1995); the relationships between client firms and vendors (Kim & Chung, 2003); and how the technology acceptance model can be used to examine intentions to outsource (Benamati & Fajkumar, 2002). Within this body of research, there has, however, been a noticeable lack of attention given to the IT worker. This is somewhat surprising considering the need for organizations to recruit and retain talented and creative IT workers.

As indicated by recent research, organizations of all sizes intend to increase their IT workforce by the year 2008 (Zweig, 2006). At the same time organizations are adding to the IT workforce pool, as just discussed, they are increasing their use of outsourcing as a means to reduce costs. While these two ideas seem to be in conflict, they are not. In a recent IT workforce trends study, median firms indicated that they expect to source approximately 17% of their IT workforce in certain positions and to increase their IT workforce in other areas (Zweig, 2006). While not all positions in the IT profession are moving to outsourcing vendors off-shore, it is important to note the impact these changes in strategy can have on the profession as a whole. For example, educational programs in information technology and information systems have experienced lower and lower enrollments. It could be that a misperception about the impact of outsourcing on the profession is a cause (Panko, 2008).

As stated by Barthelemy (2003), one of the "deadliest sins" of management when engaging in outsourcing ventures is to overlook workforce issues. It is imperative that organizations recognize and acknowledge the IT worker when engaging in sourcing arrangements. Only one study was found that examined IT worker perceptions of outsourcing and how those perceptions impacted outcomes (Kennedy, Holt, Ward, & Rheg, 2002).

In order to more thoroughly understand how IT workers perceive outsourcing and how those perceptions impact outcomes, a research framework was developed. This framework was then used as a guide for a field study targeting IT workers from various organizations and industries. A complete discussion of the framework, field study, and study results are provided. Implications for managers and organizations are discussed as well along with directions for future research.

RESEARCH FRAMEWORK

In order to more accurately and thoroughly understand how IT workers perceive the impact of outsourcing, it was first necessary to develop a research framework to serve as a guide. As stated previously, only one study was found that empirically examined how IT workers perceived outsourcing (Kennedy, et al., 2002). The sample for this study was taken from Air Force engineering managers and focused only on how the individuals in the study perceived outsourcing would, in the future, impact their job functions.

There are actually many ways in which outsourcing can impact individuals in relation to recruitment and retention. For example, if an individual perceives that outsourcing will negatively impact their job or place in the profession, it would be more likely that the individual would seek out other career or job opportunities. If the individual perceives that outsourcing currently has impacted their job, the outcomes could be different. It is possible that both perceptions of outsourcing's impact could inherently influence the individual's perception that the profession is breaching a perceived or psychological contract. This could prove to be very significant as it relates to key outcomes such as recruitment and retention.

Another perspective taken in this study relates to how individuals view outsourcing's impact on the profession as a whole and not solely on them personally. For example, if an individual feels that outsourcing will negatively impact the IT profession, they would be less likely to join and more likely to leave the profession. The temporal aspect is also important here. If the individual feels that outsourcing has negatively impacted the profession, would they be more inclined to leave? These different perceptions were taken into account in creating the research framework presented and used here.

The framework, provided in Figure 1 as mentioned, was developed to serve as a guide to examining individual attitudes towards IT outsourcing. The framework is unique in that it considers two main factors: 1) the target of the perceptions (individual or IT profession) and 2) the temporal component (present and future). By focusing on these specific areas, it may be possible to better understand how the individual's attitudes could impact factors such as entry into the profession, job performance, career decisions, satisfaction and commitment to the profession, and intention to turnover from the profession.

[FIGURE 1 OMITTED]

In order to explore the importance of the perceptions highlighted in Figure 1, it is necessary to relate them to outcomes. Within the body of research examining the IT workforce, there have been several key outcomes noted as important to retention. Two primary outcomes include satisfaction and intention to turnover. The majority of work on the IT worker has focused on attitudes and behaviors within an organizational setting. Within this body of work, job satisfaction and career satisfaction have been shown to impact organizational commitment and intention to turnover from the organization (Igbaria & Greenhaus, 1992; Gupta, Guimaraes, & Raghunathan, 1992; and Igbaria & Siegel, 1993), and intention to turnover from the organization has been shown to impact actual turnover (Thatcher, Stepina, & Boyle, 2003).

This study provides a broader examination of IT worker perceptions that extend beyond the current organization. Perceptions are studied related to how outsourcing has/will personally impact the individual and how outsourcing has/will impact the profession. Outcomes studied relate to the individual's place in the profession and include overall career satisfaction, general satisfaction with the profession, and intention to turnover from the profession. The research method and measures used in this study are discussed in the following section. Results of the analysis are also provided.

RESEARCH METHOD

Individuals currently working in the IT profession were targeted from several large organizations in the U.S. Each person was sent an email explaining the study and requesting his or her participation. A link to a web survey was provided in the email. All individuals were assured anonymity. Eight-hundred and twelve (812) individuals were contacted requesting their participation in this study. Usable responses were received from 454 individuals representing an overall response rate of 56%.

Demographics for the sample are provided in Table 1. The sample consisted of 61.7% male respondents. The average age of the participants was 39.7. Despite efforts to receive adequate representation from different minority groups, approximately 87.4% of sample participants were white. The majority of the participants worked full time (93%); had an undergraduate degree or higher (71%); were married or living with a partner (71.8%); and represented a variety of IT positions.

The average number of years spent in the IT profession for this sample was 14, and the average number of organizations worked for as an IT professional was 2.85. Thirty-eight different companies are represented in the sample. The majority of respondents (approximately 90%) were from seven organizations providing representation from state government, healthcare, information systems, transportation, and energy industries.

In order to measure how individual IT workers perceive the impact of outsourcing on them and on the profession (now and in the future), items were developed to reflect each component of the framework. The instrument provided by Kennedy, et al. (2002) was used a guide for creating the new items. The Kennedy, et al. (2002) items had to be modified because the study focused solely on how outsourcing would impact the individual's job in the future and did not consider the impact outsourcing has had on the individual or the individual's place in the profession.

Measures for outcome variables (general satisfaction with the profession, overall career satisfaction, and intention to turnover from the profession) were based on existing instruments. General satisfaction with the profession was measured using two items provided by Hackman and Oldham (1976). Career satisfaction was measured using five items from Greenhaus, Parasuraman, and Wormley (1990), and intention to turnover from the profession was measured with four items from Meyer, Allen, and Smith (1993).

In order to determine the validity of the perception factors presented in the framework in Figure 1, a factor analysis was conducted using orthogonal rotation. Items and factor loadings are provided in Table 2. After reviewing the factor matrix, it was apparent that there was no distinction made by individuals in this sample related to the temporal aspect provided in the research framework. Individuals did not differentiate between outsourcing's impact on them now versus its impact on them in the future.

Factors did emerge for constructs related to the individual and the profession as expected. Slight cross loadings were revealed between two items (out5 and out6). These items measure career security. Individuals in the sample may have seen career security as transcending the individual/profession line if they perceived career security as being tied to their current place in IT. However, since both items are below the .50 threshold recommended for practical significance (Hair, et al., 2006) it was determined to leave them for this analysis.

RESEARCH RESULTS

The factor analysis provided in the previous section indicates that individuals do perceive a difference in how outsourcing impacts them versus how it impacts the profession. Descriptive statistics, correlations, and reliabilities are provided in Table 3 for the two factor solution and the outcomes included in the study. Reliabilities for all constructs were well above the recommended .70 cutoff (Hair, et al., 2006).

Findings from the correlation matrix reveal that perceptions of outsourcing are significantly related to key outcomes. Perceptions of outsourcing's impact on the individual were found to be significantly and negatively related to career satisfaction and general satisfaction with the profession, and positively related to intention to turnover from the profession. Perceptions of outsourcing's impact on the profession as a whole were found to be negatively related to career satisfaction and positively related to intention to turnover from the profession. Strong and positive relationships exist, as would be expected, between how individuals perceive the impact of outsourcing on themselves and the impact of outsourcing on the profession.

Although the two perception measures may be correlated, a comparison of the means indicates that, in general, individuals perceived outsourcing's impact on the profession be to more negative than its impact on them personally. The implications of this finding, as well as those presented previously will be discussed in the following section.

Additional analysis was conducted to determine if the perceptions differed based on key demographic factors: gender and age. For this sample, there were no significant differences found in the perceptions of outsourcing's impact on the individual or the profession when comparing men and women. These results are consistent with previous findings indicating that men and women tend to have similar perceptions of career experiences (Sumner & Niederman, 2003/2004). For this sample, men tended to have slightly more negative perceptions of outsourcing's impact overall. To examine if there were any differences based on age, a one-way ANOVA was used. As with gender, there were no significant differences indicated among the various age groups examined.

[FIGURE 2 OMITTED]

IMPLICATIONS

Findings from this study revealed two important issues: 1) individuals in the IT profession perceive outsourcing's impact on the profession differently from its impact on them personally and 2) the IT worker's perceptions of outsourcing's impact have implications for outcomes such as satisfaction and turnover intention. This study shows that IT professionals are aware of outsourcing's impact on themselves and on their profession. The results indicate that, both personally and professionally, outsourcing was perceived to have a negative impact.

Regardless of which positions are actually being outsourced and which are in higher demand locally, individuals in the IT profession view outsourcing as having a negative impact. Also, the fact that IT professionals actually differentiate in their perceptions of outsourcing's impact on themselves as compared to the profession is quite interesting. Instead of portending a future of doom and gloom it appears that IT professionals can acknowledge the negative impact of outsourcing on the profession without necessarily internalizing the fact. Based on this rationalization, IT professionals may not be "driven off" from the profession as some have suggested. The ability to differentiate may also mean that IT recruiting is not a "lost cause". It does, however, provide some evidence that recruitment and retention efforts should work to attenuate these negative feelings.

That said, the study's findings are hardly all positive. In fact, it is clear from the results that perceptions of outsourcing's impact are significantly related to negative workforce outcomes. These findings support Barthelemy's (2003) assertion that management must consider workforce issues when engaging in outsourcing. An organization's plan to start outsourcing, or to expand current outsourcing levels, can lead to serious workforce issues. If an organization's foray into outsourcing is to be successful, management must give all due consideration to the organization's existing workforce. Failure to address current employee issues can lead to a drop in worker satisfaction and ultimately higher turnover.

Along with the previous findings, it is interesting to note that individuals did not perceive a difference in outsourcing's impact in relation to time. There were no distinctions made by IT professionals in terms of outsourcing's current versus future impact. This appears to indicate that IT professionals do not perceive outsourcing's impact will increase with time. Said another way, IT professionals may believe outsourcing has already had its major impact. Individuals may view it as one of many possible strategies for management to use to meet organizational needs.

CONCLUSION

While the study presented herein has examined a number of issues related to IT professionals and their perceptions of outsourcing, other issues remain to be addressed. As an example, the ability of IT professionals to differentiate between outsourcing's impact on the profession and its impact on them personally should be investigated further. It would be interesting to examine the influence of personality traits and how they might relate to the ability to differentiate impacts. In particular, researchers could investigate the role of locus of control in the perception of impacts on the individual versus the profession.

Research shows that the use of IT outsourcing shows no sign of stopping. Whether these outsourced IT jobs go to domestic or offshore firms, the impact on the IT workforce will continue to be significant. As such, furthering our understanding of outsourcing's impact on current and potential IT workers is a must.

REFERENCES

Barthelemy, J. (2003). The Seven Deadly Sins of Outsourcing. Academy of Management Executive, 17(2), 87-98.

Barthelemy, J., & Geyer, D. (2004). the Determinants of Total IT Outsourcing: An Empirical Investigation of French and German Firms. Journal of Computer Information Systems, 44(3), 91-97.

Benamati, J., & Fajkumar, T. (2002). The Application Development Outsourcing Decision: An Application of the Technology Acceptance Model. Journal of Computer Information Systems, 42(4), 35-43.

Greenhaus, J., Parasuraman, S., & Wormley, W. (1990). Effects of Race on Organizational Experiences, Job Performance Evaluations, and Career Outcomes. Academy of Management Journal, 33(1), 64-86.

Growth of IT Outsourcing: No End in Sight. (2008, August). Retrieved July 14, 2008, from Computer Economics: http://www.computereconomics.com/article.cfm?id=1161

Gupta, Y., Guimaraes, T., & Raghunathan, T. (1992). Attitudes and Intentions of Information Center Personnel. Information and Management, 22 (3), 151-160.

Hackman, J., & Oldham, G. (1976). Motivation through the Design of Work: Test of a Theory. Organizational Behavior and Human Performance, 16, 250-279.

Hair, J., Black, W., Babin, B., Anderson, R., & Tatham, R. (2006). Multivariate Data Analysis. Upper Saddle River, New Jersey: Prentice Hall.

Igbaria, M., & Greenhaus, J. (1992). Determinants of MIS Employees' Turnover Intentions. Communications of the ACM, 35 (2), 35-49.

Igbaria, M., & Siegel, S. (1993). The Career Decision of IS People. Information and Management, 24(1), 23-32.

Kennedy, J., Holt, D., Ward, M., & Rheg, M. (2002). The Influence of Outsourcing on Job Satisfaction and Turnover Intentions of Technical Managers. Human Resource Planning, 24(1), 23-31.

Kim, S., & Chung, Y. (2003). Critical Success Factors for IS Outsourcing Implementation from an Interorganizational Relationship Perspective. Journal of Computer Information Systems, 43(4), 81-90.

Lacity, M., & Hirschheim, R. (1995). Information Systems Outsourcing Bandwagon: The Insourcing Response. Chichester, England: John Wiley.

Lacity, M., & Hirschheim, R. (1993). Information Systems Outsourcing: Myths, Metaphors, and Realities. Chichester, England: John Wiley and Sons, Ltd.

Loh, L., & Venkatraman, N. (1992). Diffusion of Information Technology Outsourcing: Influence Sources and the Kodak Effect. Information Systems Research, 3(4), 334-358.

Meyer, J., Allen, N., & Smith, C. (1993). Commitment to Organizations and Occupations: Extension and Test of a Three Component Conceptualization. Journal of Applied Psychology, 78, 538-551.

Overby, S. (2008, April 9). Chrysler Stakes Turnaround on IT Outsourcing. Retrieved July 14, 2008, from CIO: http://advice.cio.com/stephanie_overby/ chrysler_stakes_turnaround_on_it_outsourcing

Panko, R.R. (2008). IT Employment Prospects: Beyond the Dotcom Bubble. MIS Quarterly Executive, 17, 182-197.

Songini, M. L. (1007, April 2). Circuit City Awards $775M IT Outsourcing Contract to IBM. Retrieved July 14, 2008, from Computerworld: http://www.computerworld.com/action/ article.do?command=viewArticleBase&articleid=9015341

Sumner, M., & Niederman, F. (2003/2004). The Impact of Gender Differences on Job Satisfaction, Job Turnover, and Career Experiences of Information Systems Professionals. Journal of Computer Information Systems, 44(2), 29-39.

Tam, P. (2007, April 17). Business Technology: Outsourcing Finds New Niche; More Small Firms Farm out Tech Work to Tap Experts, Pare Costs. Wall Street Journal , p. B5.

Thatcher, J., Stepina, L., & Boyle, R. (2003). Turnover of IT Workers: Examining Empirically the Influence of Attitudes, Job Characteristics, and External Markets. Journal ofManagementInformation systems, 19(3), 231261.

Will More Offshoring Be a Result of Economic Uncertainties. (2008). HR Focus, 85(6), 9.

Worldwide Outsourcing Industry Rebounding, According to EquaTerra's 4Q07 Pulse Survey. (2008, January 18). Retrieved July 14, 2008, from Business Wire: http://www.reuters.com/article/pressRelease/ idUS155349+18Jan-2008+BW20080118

Nita G. Brooks, Middle Tennessee State University

Robert E. Miller, Ashland University

Melinda L. Korzaan, Middle Tennessee State University

Table 1: Respondent Demographics

Gender
                 Male                         61.7%
                 Female                       37.7%
                 Missing                       0.7%
Ethnicity
                 White                        87.4%
                 African-American              6.2%
                 Hispanic                      1.5%
                 Other                         4.2%
                 Missing                       0.7%
Education
                 Some College                 10.3%
                 Associates Degree             8.1%
                 Undergraduate Degree         57.2%
                 Masters Degree               14.0%
                 Other                         1.8%
                 Missing                       8.6%
Marital Status
                 Never Married                15.0%
                 Married/Living with Partner  71.8%
                 Separated/Divorced            9.3%
                 Widowed                       0.9%
                 Missing                       3.1%
Age
                 20-29                        17.2%
                 30-39                        31.3%
                 40-49                        31.5%
                 50-59                        13.6%
                 60+                           2.6%
                 Missing                       3.7%

Table 2: Factor Loadings for Outsourcing Perceptions

                          Factor Loadings

                            1      2

Impact on Individual

Outsourcing ...

has negatively            .807   .258
influenced my IT
career. (out1)

will, in the future,      .815   .389
negatively influence
my IT career. (out2)

has negatively            .849   .278
impacted my mobility
in the IT
profession. (out3)

will, in the future,      .830   .372
negatively impact my
mobility in the IT
profession. (out4)

has caused my IT          .772   .444
career to become
less secure. (out5)

will, in the future,      .757   .492
cause my IT career
to become less
secure. (out6)

has greatly reduced       .830   .303
my opportunities for
advancement in the
IT profession.
(out7)

will, in the future,      .794   .395
greatly reduce my
opportunities for
advancement in the
IT profession.
(out8)

Impact on Profession

Outsourcing

has caused jobs           .357   .833
across the IT
profession to become
less secure. (out9)

will, in the future,      .336   .854
cause jobs across
the IT profession to
become less secure.
(out10).

has negatively            .344   .864
impacted the
mobility of
individuals across
the IT profession.
(out11)

will, in the future,      .335   .875
negatively impact
the mobility of
individuals across
the IT profession.
(out12)

has negatively            .386   .828
influenced career
advancement
opportunities for
individual in the IT
profession. (out13)

will, in the future,      .384   .840
negatively influence
career advancement
opportunities for
individuals in the
IT profession.
(out14)

Table 3: Descriptive Statistics, Reliabilities, and
Correlations among Study Variables

Measure                     M         1          2         3
                           (SD)

1. Outsourcing            3.9559    (.96)
(Impact on Individual)    (1.57)

2. Outsourcing            4.9284   .733 **     (.97)
(Impact on Profession)    (1.43)

3. Career Satisfaction    4.7605   -.209 **   -.112 *    (.90)
                          (1.25)

4. General Satisfaction   5.2467   -.167 **    -.047    .574 **
                          (1.18)

5. Turnover Intention     3.7124   .184 **    .171 **   -.338 **
                          (.921)

Measure                     4         5

1. Outsourcing
(Impact on Individual)

2. Outsourcing
(Impact on Profession)

3. Career Satisfaction

4. General Satisfaction   (.91)

5. Turnover Intention     -.499 **  (.88)

** = p <.01