Service competition for IT service outsourcing

Pao Li Kuo, Chung Chi Hsieh

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Citation (Scopus)

Abstract

With IT outsourcing being a widely adopted business strategy, the objective of this study is to identify the status of competition as a mechanism for the client to induce service quality from the service providers. This paper brings up a game model of service level competition between two vendors with different marginal costs in a two-period framework. We find that there is no pure strategy in the vendors' service levels and derive the explicit form of the mixed-strategy equilibrium for the vendors. Our results show that the vendor with higher marginal cost normally would provide a minimum service level, which is required by the client, and sometimes randomize its service level, whereas the vendor with lower marginal cost is likely to provide a service level higher than the minimum service level, and is more likely to obtain a larger portion of the outsourced IT services.

Original languageEnglish
Title of host publication3rd International Conference on Innovative Computing Information and Control, ICICIC'08
DOIs
Publication statusPublished - 2008
Event3rd International Conference on Innovative Computing Information and Control, ICICIC'08 - Dalian, Liaoning, China
Duration: 2008 Jun 182008 Jun 20

Publication series

Name3rd International Conference on Innovative Computing Information and Control, ICICIC'08

Other

Other3rd International Conference on Innovative Computing Information and Control, ICICIC'08
Country/TerritoryChina
CityDalian, Liaoning
Period08-06-1808-06-20

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Software
  • Control and Systems Engineering

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