This paper reports on IS outsourcing strategies for subsidiaries of conglomerate groups that have group SI company. The integration of information systems departments in conglomerate groups is one of the major trends in Korea's information systems outsourcing market. Because outsourcing history is short, there is general lack of expertise to support customer requirements effectively. Currently in Korea, systems integration companies of conglomerate groups occupy a high market share. So, subsidiaries of conglomerate groups do their outsourcing with their group SI company unconditionally regardless of their unique business environment.
Ideally, we want to consider, however, both the outside outsourcing companies that have special technologies and experiences and the group SI companies to best satisfy our information needs for outsourcing. To decide appropriate outsourcing strategy of conglomerate firms, this study introduces two factors - organization's information intensity and group influence index - through the literature review. According to these factors, we recommend outsourcing strategies using a contingency model and try to verify the recommended strategies through case studies of several conglomerate groups. We survey current outsourcing strategies, organization's information intensity, group influence index and user satisfaction of information systems of the selected conglomerate groups. Results from these case studies show that user satisfaction of information systems is higher when current outsourcing strategy of information systems is higher when current outsourcing strategy matches the recommended outsourcing one.
