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

Employees react to supply chain as non-differentiating work. 
Employees seemed to 
generally acquiesce to support SSP over time. As extraordinary as SSP may have felt to some, it 
appeared like a natural set of puzzle-solving activities to address a widely accepted capacity 
problem under the new normal science of managed services agreements. Icarus operated under a 
growth paradigm at the time, and SSP was the type of managed serviced agreement that other 
firms in the same field could have been expected to attempt as well. That said, it seems unlikely 

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other firms in the same field as Icarus would look to outsource their Supply Chain software 
development at a time when it was mission-critical to their organization. Along these lines, most 
Icarus employees never wholeheartedly accepted executives’ assertion of Supply Chain software 
development as non-differentiating. One executive related the skepticism voiced by some 
employees: 
So I will tell you [what] a lot of them [employees] did, the first thing they [employees] 
did was the first thing I did. “What, are you crazy? This is in the middle of our critical 
path.” If you were to have came [sic] back and said that it was HR or Legal or something, 
everyone would say, “Who cares?” But because this is something that is viewed as 
strategic, they thought that it was crazy. The lower you went [in the IT department 
hierarchy], the more it became, “Well, what else are they going to give away? ...Oh, this 
is the first step to [more] outsourcing. We’re going to outsource all of IT.” 
At our level [directors and vice presidents], we didn’t really have concerns with 
that as much, because there’s too much work coming in and we know that we do not want 
to follow the path of [another firm’s failed outsourcing program], et cetera. We know that 
was a fiasco. But we have to do things different, there’s more work than we can handle. 
And so I think for most of the directors it was, “No, we get why they’re doing it.” . . . For 
the most of them, it was more of, “Really? This is the area you want to start with?” Same 
sort of thing I went through. When you went below the directors, you start getting into, 
“What’s this really mean? What’s the message? What’s the writing on the wall? What’s 
the hidden agenda?” (Executive, personal communication, March 20, 2013) 
Employees’ initial reactions to executives’ decision to outsource the Supply Chain software 
development included both disbelief given their views of the strategic importance of their work, 

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and foreboding that the decision is first step to larger outsourcing of IT. In many ways, 
employees’ questions of why executives chose to outsource Supply Chain over other functions 
such as HR and Finance mirrored the executives’ debates. It is also notable to see the “we can do 
it better than anybody else” element of the Icarus habitus in this executive’s comments regarding 
the firm whose failed outsourcing mistake IT executives vowed not to repeat. 
While employees never fully accepted Supply Chain as a non-differentiated capability, 
some resigned themselves to the realities of executives’ decision: “I think some of the people 
who’ve been around for a long time were [like], ‘Really? This is [Supply Chain] man; this is 
really the core of what we do.’ They had a hard time accepting it. I think they’ve gotten past that 
now” (Employee, personal communication, November 30, 2012). Others were stronger in their 
criticisms of executives’ non-differentiated assessment, especially given the field Icarus was in: 
“I would say the majority of people are wondering why, being a strategic area, why we would 
have gone this way. [Supply Chain] is the backbone of every [retail] company [in the twenty-first 
century], and it’s a strategic differentiator” (Employee, personal communication, January 7, 
2013). 
Employees, particularly veteran engineers, were de-motivated by executives’ assertion of 
Supply Chain software development as a non-differentiating capability. Taxonomically, 
however, employees were not in a position of power to challenge executives’ decision: 
I would say not everybody would look at [Supply Chain software development] as being 
non-differentiating. I think because non-differentiating means that you’re not special and 
it maybe means that you’re not providing extra value with the work that you’ve been 
doing for the last twenty years. Because there’s a lot of people, similar to a lot of other IT 
groups in Icarus, that we have some real long-termers that have really given their heart 

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and soul into the work that they’ve done, and the work that they have done is truly 
making things better and probably could be very innovative within the space. (Employee, 
personal communication, December 3, 2012) 
Although employees came to understand executives’ articulation of the capacity problem, they 
never accepted executives’ Global Staffing Model rationale that Supply Chain software 
development was a non-differentiated capability. Richard and Donald had access to higher social 
capital (Bourdieu, 1983/1986) via their roles’ taxonomic advantage and ability to wield the 
cultural capital of the Global Staffing Model. Over reliant on data they found to be convenient, 
they used the inkblot test interpretation of the GSM to legitimize outsourcing the Supply Chain 
work by labeling it as “non-differentiated.” This infocentric “tunnel vision” (Brown and Duguid, 
2000) blinded executives to potential of externalities or future consequences caused by their 
oversimplified strategy. In Jackall’s terms (2010) they suffered from a “fragmentation of 
consciousness” or marginalization of their ability to reflect about the future because of the 
pressure to produce results. Fixated on the perceived exigency of the “capacity problem” Richard 
and Donald were intent on seeing SSP through to its resolution.