A framework for global IS outsourcing by application service providers

The phenomenal growth of the Internet has persuaded many companies of its potential as a channel for outsourcing information systems applications. Application service providers (ASP) are firms that offer outsourcing application services to many organizations via the Internet. By contracting ASP, organizations are having information technology (IT) staff focusing their efforts on core competencies while, at the same time, capitalizing on the expertise of outsourcer. On the other hand, many ASP turn some of their projects to global outsourcer. The study develops a framework that identifies the critical factors influencing ASP' decision to outsource globally. These factors are product development costs, IT talent, product quality, communication technology, tax incentives, and cultural differences. The rest of the paper discusses the differences between different types of global outsourcing, explore the emerging trend and advantages of utilizing ASP, and recommend measures to ensure the success of projects to be developed globally. The framework developed in this paper represents a foundation for more rigorous empirical research to identify the significance of each influencing factor. The results can provide ASP managers with a road map that addresses issues of concern in global outsourcing.