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The success of an IT outsourcing project depends crucially on the close collaboration between both the outsourcing organization and the service provider. In this paper, we present a model to study the effort contribution from the two parties during the IT outsourcing process. The model incorporates two important and commonly observed features: 1) the true quality of the delivered project is unobservable, and 2) the outsourcing organization tends to downplay the quality of the project upon its delivery. The model is solved as a four-stage dynamic bilateral effort contribution game, and the results shed more lights on the interactions and dynamics between various parties during the IT outsourcing process.
Date of Conference: 4-7 Jan. 2011