Knowledge Intensive Business Services

Knowledge Intensive Business Services

Organizational Forms and National Institutions

Edited by Marcela Miozzo and Damian Grimshaw

This book focuses on the development of Knowledge Intensive Business Services (KIBS) and the associated market characteristics and organisational forms. It brings together reputed scholars from a mix of disciplines to explore the nature and evolution of a range of Knowledge Intensive Business Services. Through an examination of KIBS sectors such as computer services, management consultancy and R & D services, the contributions in this book argue that the evolution of KIBS is strongly associated with new inter-organizational forms and that different country institutions shape the characteristics of these organisational forms.

Chapter 4: Modularity and Innovation in Knowledge Intensive Business Services: IT Outsourcing in Germany and the UK

Marcela Miozzo and Damian Grimshaw

Subjects: business and management, knowledge management, economics and finance, services, innovation and technology, knowledge management


Marcela Miozzo and Damian Grimshaw INTRODUCTION Although IT outsourcing has been an accepted business practice since the 1980s, it has shown remarkable growth in recent years and has been the engine of growth for the software and computer services sector. Its nature, however, has changed dramatically. IT outsourcing has matured from a commodity service to ‘risk/rewards’ partnerships. In several countries (such as the UK, the USA and Germany), large contracts (‘mega-outsourcing’) have been agreed between a small number of multinational computer services suppliers and large client organizations, including central and local governments and large services and manufacturing firms. Many of these contracts are seen as having a number of problems, including excess fees, declining services, inability to adapt to changing business and technology needs, loss of power to monopoly suppliers and inability of the clients to manage the interface with the suppliers (Lacity and Hirschheim 1995; Lacity and Willcocks 2001; Willcocks and Fitzgerald 1994a). However, and despite the above problems, large-scale IT outsourcing is still continuing. One of the problems in explaining the continuity of large-scale IT outsourcing is that existing studies apply theoretical approaches which offer limited explanatory power. For example, it is argued that firms externalize their IT activities because they can either save on costs/risks (the transaction cost perspective) or focus on their core competences (Lacity et al. 1994a). Little attention has been paid to wider changes in production systems. Indeed, while there have been a number of contributions examining the nature and impact of IT...

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