Considering the Human Element of Long-Term IT Outsourcing: A Case Study of an Australian Bank

While many studies on outsourcing have identified its advantages and disadvantages from an organizational perspective, there has been insufficient attention paid to the impact of outsourcing on employees. A case study methodology was used in the analysis of the effects of IT outsourcing on the well-being of IT professionals working in a leading Australian bank. Despite the success of the outsourcing initiative for the organization, evidence from an intranet forum established in the six months prior to the outsourcing transition and surveys conducted of remaining staff two years post-implementation revealed a high degree of non-acceptance by both sets of workers. This arose despite management’s attempts to communicate effectively with staff. Within this same period, the bank also had to adjust to the effects of a new psychological contract to which the now outsourced IT staff were working. The study concludes that the disaffection of staff resulted mainly from a lack of consultation during decision-making steps and a sense of powerlessness to influence management. Suggestions are provided as to how outsourcing could be accomplished in ways that improve employee acceptance and reactions to change.