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

Project Phoenix 
TechStaff was an India-based Information Technology (IT) services firm that began 
working with Icarus more than a decade before SSP. In that time, it had grown annual revenues 
with Icarus from a few million to over seventy-million dollars. Two years prior to the start of 
SSP, the CIO and IT executives attempted to implement a quasi-managed services agreement 
with TechStaff given a constant demand by Icarus’s business teams to accomplish more IT work 
at a faster pace. The initial scope of this project, known as “Project Phoenix” was to move larger 
IT functions to TechStaff as potential managed services. In return, TechStaff would charge 
Icarus lower hourly rates given the increased volume of business. 
Along with members of my team, I lead the contracting and negotiation aspects of this 
project, and as I mentioned in Chapter Four, Project Phoenix was an important “stretch 
assignment” or probationary crucible in my moral career. However, the effort quickly devolved 
into a large-scale “staff aug” staffing model, as there was scant support among executives at that 
time to enter into an outright outsourcing relationship. Contractors were subservient to 
employees in the Icarus IT culture, which made it likely they would be treated as patsies and 
blamed when things go wrong. Employees and executives came to view TechStaff (not Icarus) as 
“not being ready” to work in a managed services relationship. Thus, Project Phoenix became an 
exemplar of how executives were “maturing” their relationships with vendors. Additionally, and 
even more importantly, it was not a complete failure. Put differently, it did not force Icarus IT 
executives to dramatically and publicly change directions. 

---

72 
There were no direct impacts to employees in terms of losing jobs or being moved to new 
assignments as a result of Project Phoenix, which became known as a “preferred partnership” 
(not “outsourcing”). TechStaff was seen as the go-to vendor for much of Icarus’s IT work, and 
the Project Phoenix “preferred partnership” became a significant part of the Icarus habitus. By 
the conclusion of this research, TechStaff had tripled its annual revenue from Icarus to over two-
hundred-million dollars, or over one-sixth of the annual Icarus IT budget. TechStaff was 
eventually considered for the SSP contract and competed directly against ComTech for the 
business. However, despite its “preferred partnership” status, TechStaff did not earn the SSP 
contract. The specific reasons TechStaff was not selected are confidential aspects of the sourcing 
process and not directly relevant to this study. Nevertheless, the decision does highlight IT 
executives’ infocentric approach to SSP a la Brown and Duguid (2000). Executives knew that 
Phoenix was not working as intended, but never examined what was happening in the 
“fuzziness” of the habitus that prevented it from succeeding. Instead, they approached SSP as if 
adding “bells and whistles” to the Project Phoenix approach would make SSP a success. 
Project Phoenix was Icarus executives’ first fumbling attempt at a managed services 
agreement. It never moved past a “staff aug” arrangement, but its massive scale served to 
gradually condition employees to the changing nature of IT work at Icarus, even if it was not 
referred to in name as “outsourcing.” Over time, many IT employees spent more time working 
with vendors in governance and oversight capacities as opposed to technical roles. 
Project Phoenix institutionalized the “staff aug” model for the Icarus IT department, and 
executives remained adamant that they would never repeat the failed outsourcing project of one 
of their competitors. They could not allow that type of fiasco happen at Icarus. With the cost of 

---

73 
failure so high, SSP would need an executive sponsor with the blind ambition to succeed if it 
were to have a chance to live up to the expectations of a large-scale managed services agreement.