Rise and Fall of an Information Technology Outsourcing Program: a qualitative Analysis of a Troubled Corporate Initiative

The Capacity Problem and the Genesis of the Strategic Staffing Program 
The central problem executives decided needed resolution emerged after the IT 
department reorganization and the birth of the Global Staffing Model (GSM). They collectively 
decided that they foresaw the need for additional resources to meet an expected surge in demand 
for IT work from the Icarus business groups. Despite being allowed to incrementally add 
employees in the years leading up to SSP, IT executives believed the expected demand would 
still eclipse their staffing capacity. As one executive noted, “I would say early on, the 
conversations were, ‘We need to find another way to grow. We need to find another lever that 
would free up our team members.’ I think we all saw this train coming” (Executive, personal 

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interview, August 24, 2013). In the minds of nearly all the IT executives, the issue facing the 
Icarus’s IT department was initially defined as the previously mentioned “capacity problem,” 
meaning that there would be more than enough work but not enough personal onboard to do it. 
Another executive described the “capacity problem” quantitatively: 
From 2010 to 2011, we went up [in the amount of IT work] by eighteen-percent. From 
2011 to 2012, we went up by thirty-percent. And depending on whether you measure 
number of sheer volume of projects, sheer number of effort where you see [database] 
table changes, or whether you’re using dollars spent, it goes from twenty-five to thirty-
five-percent from the previous year to this year. This year, in 2013, we're looking at up 
to a fifty-percent increase in workload from the previous year. ...metrics show that we’re 
delivering things faster and cheaper...I’m able to crank out a unit of work fifteen-percent 
faster this year than I was the previous year...and I'm able to do that at a lower cost point. 
The challenge is, we’re diluting it [the IT department’s capacity] across more and 
more projects, so to our business [Stores, Merchandising, Finance business divisions, 
etc.], it seems like we’re not doing as much. So whereas before I was working on one-
hundred projects at one time, now I’m working on one-hundred-fifty projects. So even 
though I got a [sic] fifty-percent increase in my productivity, what's happening is, I’m 
diluting that over fifty-percent more projects. And so to them [the Icarus business 
divisions], it feels like it’s taking longer to get things [projects completed]. And we just 
can’t add more [employee] head count. (Executive, personal interview, March 20, 2013) 
In the eyes of the Icarus business divisions, IT was a bottleneck. These groups needed IT to 
enable and automate solutions to their business opportunities, and their demands historically 
outpaced the IT division’s ability to fulfill requests for new and upgraded systems. Furthermore, 

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the IT department had always been subservient to the business divisions such as Stores, 
Merchandising, and Finance. Those business executives considered IT the “child” sitting at the 
“adult’s table” during a holiday meal. They tolerated the “child,” albeit in lighthearted, if not 
condescending tones. IT was necessary, but was meant to be seen-and-not-heard by the “adults” 
in the Stores, Merchandising, and Finance divisions. Thus, like a child wanting to earn her or his 
place at the “grown-ups’ table,” the CIO and IT executives’ were intent on doubling the output 
of their recently transformed software factory to prove IT was as much an adult as the other 
Icarus divisions.
An intuitive solution for IT executives at the time would have been increasing the number 
of employees in their software factory. Executives acknowledged this, but IT (along with all 
Icarus divisions at the time) were not allowed to increase their employee staffing levels. “We 
needed more team members [but we were] in a flat headcount environment” (Executive, personal 
interview, June 27, 2013). Furthermore, IT executives recognized the need to upgrade older 
applications still used by Icarus as an additional factor legitimizing the “capacity problem.” This 
compounded pressure for executives to both meet increased demands for implementing new 
functionality while upgrading existing technologies: 
About the same time we had just published our first technology roadmap, we 
acknowledged that the majority of our [technology] portfolio was really old—at least ten 
years old—and all on aging technology and technology platforms. The majority of it [was] 
custom and so it was highly expensive for us to maintain. We were going to need to evolve 
the technology platform. As a result, we could see a tidal wave of work coming at us. As 
we started looking at the tidal wave, [we] acknowledged that our current [vendor staff 
augmentation] staffing model was never going to work for us to scale at the rate we needed 

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to scale. (Executive, personal interview, March 21, 2013) 
The combination of year-over-year increases in business demands for IT, a restriction on adding 
additional employees, and an aging technology portfolio reinforced executives’ need to solve the 
“capacity problem.” They had implemented Project Phoenix nearly eighteen months prior to this 
realization of a “capacity problem,” and had dramatically increased the amount of work being 
performed by TechStaff. However, any productivity or efficiency gains made in the Phoenix Era 
were not enough to keep pace with the rising IT demands. Phoenix was not working (enough) to 
solve the capacity problem, and executives were not able to add additional Icarus IT employees.
Because the executive habitus favored more bold and imaginative strategies as better than more 
prudent and incremental ones, executives decided they need a new model for hiring contractors 
that would go beyond the Phoenix Era preferred partnership with TechStaff. 
As Icarus faced the brave new world of digital retailing, the CIO and IT executives set 
about solving a presumed “capacity problem.” It should be noted that there were other possible 
interpretations of the issues facing the IT department. However, this reality seems not to have 
surfaced. Instead, Icarus IT executives began an effort to identify “solutions” to the “capacity 
problem” before fully researching other interpretations. This meant that other emerging issues of 
the time—like digital security and the digital disruptions to the traditional brick-and-mortar retail 
paradigm—did not receive the same amount of attention that hindsight would suggest. These 
were not complete blind spots for the IT organization, but they were second tier considerations to 
the demands by Icarus’s “adult” executives for more IT output. Yet as IT executives focused 
their attention on doubling the output of their software factory, Icarus was already starting to 
show the early signs of an identity crisis that would become magnified in the years that followed. 

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