Critical review – Outsourcing: a paradigm shift

Outsourcing of services has been receiving increasing attention in management literature and praxis. It is considered that greatest attention has been given to the enhanced efficiency of transaction costs through outsourcing. In contrast, this paper explores what is being outsourced, the drivers for outsourcing and the IT commodification influence on outsourcing. Particular attention is given to examining supplier‐client relationships and the consequently new emerging outsourcing arrangements and organisational forms. The benefits and costs of outsourcing and client satisfaction are discussed as well as outsourcing in the public sector. The paper highlights that a fundamental paradigm shift is underway from strictly provider/supplier relationships to an emerging array of partner based relationships comparable with the Japanese kieretsu relationship model. The paper concludes by identifying areas for further research for increasing understanding of the paradigm shift that is highlighted.