Many hospitals are experiencing pressure to improve their operational efficiency and patient safety due to escalating costs and increased competition. In order to achieve these and other business objectives, hospitals have to outsource some of their Information Technology (IT) functions to external outsourcing contractors. The scope and range of IT-related outsourcing services are also increasing, as evidenced by the promotion of Applications Service Providers (ASP), Business-to-Business (B2B) integration, cloud-drive business and IT services, desktop and helpdesk, IT infrastructure services, and software development outsourcing. However, little attention has been paid by many hospitals to the key factors that affect their IT outsourcing decision-making and negotiation processes. This is important given that the IT outsourcing can play a key role in organizational success. Moreover, contract decision-making and negotiation processes in hospitals are particularly under-studied, especially in the management and evaluation of the IT outsourcing contracts. Hence, the main objectives of this chapter are to: (1) examine and identify some key factors affecting the management and evaluation of IT outsourcing contracts in Taiwanese hospitals; and (2) propose a set of recommendations to overcome or minimize the key issues identified in this study. One contribution of the study is the recommendations provided to deal with issues that are critical in the management and evaluation of IT outsourcing contracts in hospitals.
Contract Design Choices and the Balance of Ex Ante and Ex Post Transaction Costs in Software Development Outsourcing