Exploring the Organizational Structure and Coordination of Multi-National IT Outsourcing Vendors

This paper explores the organizational structure and coordination mechanisms used by large ITO-vendor organizations. Five global ITO-vendor organizations were studied. The results show that all five use a “front-back hybrid” structure. All five vendors divide their front-end labor pool according to the types of customers that they serve. On the back-end, their labor pools are organized around the functions offered by the company. Such a front-back structure enables them to focus simultaneously on developing distinctive capabilities, capturing scale and nurturing long-lasting relationships with their customers. To deliver each customer’s requirements, resources from the various front and back-end units are coordinated using a hybrid-matrix approach. This structure enables quick response to a client’s shifting requirements. The primary contribution of this paper is its finding that, consistent with the theory proposed by Galbraith et al. (2002) for organizations of this type, all five global ITO vendors had adopted both front-back hybrid and cross-business-team approaches