IT outsourcing in small to medium-size enterprises in the Republic of Ireland: an investigation

Abstract

In Ireland, small to medium-sized enterprises (SMEs) play a very important role in the economy by their contribution to both employment and also to gross domestic product. Addressing issues pertinent to SMEs is of paramount importance to the sector. With the world of Information Technology (IT) rapidly growing bigger and stronger every day, so to are the challenges faced by it. It enables SMEs to automate their operations, seek new opportunities and enhance their strategic business position in local and international markets. The inability of such companies, due to their size and structure, of dealing with such challenges makes it difficult for them to benefit from IT technologies. One way out of this complex situation is to outsource the IT technology requirements. This increase in IT technologies has subsequently given rise to an increase in the number of outsourcing vendors available to take-over such activities. The value of conducting this research is outlined in Halvey & Melby (2005) where it states that IT outsourcing has become a $536 billion worldwide marketplace.1 As IT is a company wide function, it is subject to many influencing factors that either support or discourage the decision by managers to outsource. The author of this study analysed a great deal of literature to identify such factors and ten interviews were earned out on SMEs in Ireland. This study endeavours to identify the pattern of IT outsourcing issues of SMEs within the Republic of Ireland. It reveals that the main drivers behind IT outsourcing are cost reductions, although this is directly related to quality of service offered and the need to focus on core competences. The study also identifies the main activities that are being outsourced by SMEs, the satisfaction levels of the SMEs with their service providers and makes suggestions for further research in this crucial sector.