IT outsourcing contracts: practical implications of the incomplete contract theory

Abstract

This article deals with IT outsourcing contracts. Contract amendments are often necessary, either because of changing client needs, or because the contracts themselves are incomplete. In some cases, requests for changes give rise to disputes and even litigation. Also market conformity is a hot topic for IT outsourcing contracts. Dissatisfied clients may wish to repatriate the service as a result, which may be very costly or even impossible. This results in the issues that are addressed in this paper: the transition to another supplier. The approach we used includes desk research involving six European IT outsourcing situations, including one that was worldwide in scope. A senior lawyer and contract managers with the IT supplier were interviewed on the basis of this desk research. This paper presents a series of propositions related to the management of IT outsourcing contracts derived from this research.

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