Understanding informations systems outsourcing success and risks through the lens of cognitive biases

Because outsourcing of information systems (IS) is now widespread, it is generally assumed to be successful. It is also often assumed that outsourcing risks are easily managed. In this paper we adopt an “evidence based management” approach to first test these assumptions through a qualitative metaanalysis of academic studies into IS outsourcing outcomes. Our research reveals a shortage of reliable and valid evidence for outsourcing’s benefits, and for the level of risk involved. We then use data from a series of focus groups to explain the paradox of widespread adoption of a strategy with limited empirical support. These focus groups were interpreted through the lens of research on a
range of cognitive mechanisms and biases that are known to affect decision makers. We conclude that cognitive mechanisms that are likely to affect sourcing decisions include framing biases, cognitive dissonance, attribution error, and the “optimism”, “confirmation”, “disconfirmation” and “overconfidence” biases. Given the shortage of supporting evidence, and the potential for these biases to operate, we argue that researchers need to be more critical in their analysis of reports of the success and risks of IS outsourcing.