Explaining IT outsourcing satisfaction using Domberger's theory: An SME perspective

IT outsourcing has emerged as an important tool for enabling organizations to gain access tospecific skills and services, focus on their core competencies, and reduce the cost of IT service provision.With the increasing number of IT outsourcing failures, it is timely to identify the determinants of IToutsourcing satisfaction. This study investigates the types of IT function outsourced and examines thefactors influencing customer satisfaction in IT outsourcing in Malaysian small- and medium-enterprises.Using an email questionnaire survey, data are collected from 100 firms listed on the Directory of Smalland Medium Enterprises in Malaysia. Drawing from Domberger's Theory of the Contracting Organiza-tion, four hypotheses are developed and tested in this study. Using the PLS path modelling technique, thefindings show that focus on core competency, cost reduction, access to IT expertise and skills, andflexibility are positively related to customer satisfaction in IT outsourcing. The paper includes implicationsand recommendations for future studies.