Introduction In the private sector the growing trend towards information technology (IT) outsourcing has been driven by a range of financial, business, technical and micro-political factors (McLellan, Marcolin and Beamish, 1995; Clark, Zmud and McCray, 1995; Lacity and Hirschheim, 1995). Our own re- search suggests that four main drivers seem to be operating (Willcocks, Lacity and Fitzgerald, 1995). IT outsourcing is often a response to the hype and publicity surrounding the subject – a bandwagon effect leads to senior managers asking: ‘why don’t we outsource IT?’ Outsourcing may also be a response to tough economic and the competitive climates and the need to cut, or at least control costs. It may also be conceived as part of a larger and longer-term change in how organizations are structured and managed – part of what we would call a move towards the contractual organization. There is already a strong literature arguing the case that organizations need to focus on their core competences and activities, while contracting out to the market that work which can be done more cost-effectively or acts as a distraction from core activity (Pralahad and Hamel, 1990; Quinn, 1992). Finally, outsourcing may reflect the desire of sen- ior managers to get rid of a troublesome function that finds it difficult to demonstrate its business value (Lacity, Willcocks and Feeny, 1995). Many of these drivers translate across into the market-testing, compulsory competitive tender- ing and privatization initiatives encouraged in the UK public services by the British government in the early to mid-1990s. Market-testing proposals made in November 1992, for example, saw IT act- ivities in thirteen government departments cited as an essential part of the increased ‘businessiza- tion’ and competition desired by government. Contracting out could range from selective out- sourcing as occurred in our NHS case (see below) through to large ‘total’ outsourcing deals as British Journal of Management, Vol. 8, Special Issue, S107–S120 (June 1997) Information Technology in Public Services: Towards the Contractual Organization? Leslie P. Willcocks and Wendy L. Currie* Templeton College, University of Oxford, Kennington, Oxford OX1 5NY, UK and *Sheffield University Management School, 9 Mappin Street, Sheffield S1 4OT, UK The growing trend towards information technology (IT) outsourcing is analysed within the UK pubic sector. The paper first details the research findings on factors influenc- ing the degree of success experienced in a range of IT outsourcing deals. These factors are then utilized as a framework for analysing and discussing two case histories – of selective and large-scale IT outsourcing – drawn from different parts of the public sector. Both demonstrate how distinctive public-sector contexts influence the direction and degree of outsourcing. At the same time they highlight a range of managerial and organ- izational issues raised by moves towards contractual, core competence forms of organ- izing. Selective outsourcing is revealed as effective provided key decisions and actions are taken. The large-scale outsourcing case raises a number of critical issues not just for how it can be conducted in public-sector contexts, but also about the efficacy of such arrangements in terms of cost savings, possible over-dependence on a few sup- pliers, and ability to respond flexibly to changing political requirements and legislation. © 1997 British Academy of Management