DECISION MAKING FACTORS OF INFORMATION TECHNOLOGY OUTSOURCING FOR BANKING INDUSTRY

Since 1989, Kodak Company in US started to outsource its IT systems and processes largely to a IT company, IT outsourcing moved to a new milestone. After the first case, Citibank, The Development Bank of Singapore, J.P. Morgan Chase bank, and ABN.AMRO bank one after another did the same actions globally trying to reduce the cost and improve their competitiveness by adapting IT outsourcing. Consequently the IT company shift its role to become as strategic partner. The total market value of IT outsourcing around Asia Pacific Region increases annually in recent year. However, due to at the early stage, how to deal with this subject for the banking companies in Taiwan indeed is a strategic decision.
In this study, related literatures and banking company cases from other countries are reviewed to establish consideration factors and decision criteria’s during the strategic decision making process. On the other hand, the decision making process of the first IT outsourcing case of banking company in Taiwan is analyzed. The difference among Taiwan case and other country cases is also studied. The study result shows that the consideration factors for decision making, their relative importance is not same. For instant, banking company case in Taiwan “transferring IT personnel smoothly” is in the top 5 critical factors, that differs to the cases of other countries with “helping business growth rapidly” in the top 5 factors.
For Taiwan case, the different critical factor is probably contributed to traditional culture of the Eastern society that enterprise is more like a big family and employee is a group member of the family where to unemployed anyone is not commonly accepted. This study suggests that once the IT outsourcing strategic decision is made, a consensus for CEO, personnel manager, and IT employees should be achieved. All the effort and target should be insistent. With high confidence to each other of the three parties, the transition stage will move in smooth condition.
For lacking “helping business growth rapidly” in top 5 critical factors of the Taiwan case, the study refers to reason that only in business decrease condition the enterprise will seek for the IT outsourcing for cutting operation cost to survive. Normally, they will not look for IT outsourcing because of enterprise transformation that will help business growth rapidly.
This study suggests that by employing worldwide best practice Component Based Model (CBM) of banking to compare with existing banking business model, the difference between this two models will be focused that the business direct is able to be developed. Thereafter IT new system or transformation will be worthy to invest that could push banking enterprise to transform successfully and improve their competitive ability.