An empirical evaluation of client-vendor relationships in high maturity Indian software outsourcing companies

The study presented in this thesis investigates offshore software outsourcing relationships. Offshore software outsourcing has been increasing continuously for the last decade. More and more software vendor companies from different countries such as India, Russia, Brazil and China are joining the offshore `bandwagon'. Indian software companies especially have managed to secure a leading position as offshore software outsourcing vendors. However, with more client companies outsourcing their software operations offshore, issues associated with the establishment and management of offshore outsourcing relationships have become more important. With the growing volume of offshore outsourcing, the number of failures is also increasing. A review of the literature suggests that success or failure is mainly dependent on the management of relationships between client and vendor. Subsequently, it is imperative to identify critical factors that can help to better manage offshore software outsourcing relationships. Furthermore, it is also important to identify the difficulties faced in managing offshore relationships and also how clients and vendors develop mutual trust. Trust is important to understand in the offshore software outsourcing context as it has been reported as the most significant contributor to the management of any human relationship. Nonetheless, different advantages that motivate clients to outsource are also important in understanding offshore software outsourcing. In this study, motivators, difficulties, critical relationship management factors and trust building factors are studied by means of empirical investigation into eighteen high maturity Indian software companies and six of their clients based in the USA and Europe. Multiple case studies with grounded theory analysis techniques are used to conduct the empirical investigation. Grounded theory, which is a part of qualitative research, helps to develop emergent model from empirical data. Furthermore, multiple case studies are used as objects to collect qualitative data and organise overall investigation. The research methods used were piloted with two Indian software companies before conducting the full empirical investigation. The results of this investigation suggest that client companies are motivated to outsource their software offshore by cost savings, quality, flexibility, core competence, skills availability, higher productivity, faster development, technical expertise and high maturity of vendor. The results also uncovered difficulties faced by clients and vendors in managing relationships. Difficulties include managing cultural differences, expectation mismatch, language differences, loss of control, distance, time zone differences, workforce reshuffling and post-contractual matters. This investigation further identifies critical factors to managing offshore outsourcing relationships such as effective communication, a process driven approach, commitment to the project, transparency in actions, consistency in performance, value addition and allocating resources effectively in the project. Furthermore, results from this study suggest that previous work reference, experience and reputation in the offshore outsourcing business, background of the key vendor employees, investments, prototyping and personal visits from the client are important for achieving trust. This study also identifies that to maintain trust in the relationship both clients and vendors perceive critical factors such as commitment, process driven approach, communication, confidentiality, performance, honesty, transparency, demonstrability, personal relationships and working together in outsourcing project. Based on the results of the empirical results and their discussions, this study presents an emergent model and practical guidelines for managing offshore software outsourcing relationships. The uniqueness of this investigation is in its large scale empirical investigation into high maturity software companies. Furthermore, most previous studies have investigated either clients or vendors, whereas this study investigates vendors and their corresponding clients. An investigation into trust in offshore software outsourcing relationships is also a significant addition to the existing literature relevant to software outsourcing. The empirical investigation gave rise to proposals for discussions and to an emergent empirical model. Thus the current body of knowledge in offshore software outsourcing is enhanced by this work. Moreover, practical guidelines, based on empirical results are proposed for client and vendors to help them manage their offshore software outsourcing relationships

Control, Process Facilitation, and Requirements Change in Offshore Requirements Analysis: The Provider Perspective

Process, technology, and project factors have been increasingly driving organizations to offshore early software development phases, such as requirements analysis. This emerging trend necessitates greater control and process facilitation between client and vendor sites. The effectiveness of control and facilitation has, however, not been examined within the context of requirements analysis and change. In this study, we examine the role of control and facilitation in managing changing requirements and on success of requirements gathering in the Indian offshore software development environment. Firms found that control by client-site coordinators had a positive impact on requirements analysis success while vender site-coordinators did not have similar influence. Process facilitation by client site-coordinators affected requirements phase success indirectly through control. The study concludes with recommendations for research and practice

The development of service provider's BPO-IT framework

Purpose The decision to operate BPO-IT organisational model by a business process outsourcing (BPO) service provider has far reaching benefits. The purpose of this paper is to develop a service provider’s BPO-IT framework that provides in-house IT function (software) required to process client services. Design/methodology/approach The multi-case study adopted an exploratory sequential mixed method research approach. In the first instance, seven BPO service provider organisations were investigated in the qualitative phase and 156 in the quantitative phase, respectively. Findings The adoption of the developed framework indicates that it could reduce failures in BPO relationships through reduced turnaround time in processing client services, improved quality of service, reduced cost, improved client and provider’s competitiveness, and confidentiality of client operations. Outsourcing clients could lay the foundation for a successful relationship by adopting a selection process that could choose the right provider. Originality/value The paper reveals BPO-IT organisation’s operation towards in-house provision of software required to process client services. A research exploring BPO service providers from a top outsourcing destination like India could provide offshore outsourcing clients the information to move towards onshore outsourcing. </jats:sec

Electronic Medical Records Application Development: Perspectives of the Service Provider

Healthcare Information Technology (HIT) is a relatively new phenomenon and refers to the use of computer applications to store, process, and use clinical, administrative, and financial information among various health care entities. HIT is widely regarded as a key to improving the quality of healthcare in the United States and potentially reducing its cost. Yet, its implementation is a continuous challenge for the healthcare industry. One of the key applications of HIT is Electronic Medical Records (EMR). The implementation of an EMR system may result in improved and more efficient care and patient safety, but it may also incur additional costs. Furthermore, if the development of the application is undertaken by an offshore vendor, it adds another layer of complexity. This research case documents the experiences in the development and implementation of an EMR system for a U.S. client by an offshore vendor. While client experiences abound in the literature, this study is unique in that it draws from the perspective of the service provider. Key findings of the study show that the major issues related to EMR development by an offshore vendor include gaining domain knowledge, requirements generation, and access to expertise. Like offshoring projects in general, client-vendor communication remains perennially important. Beyond EMR, this vendor's critical success factors in HIT projects offshore development additionally include scope containment, need for a client liaison, and managing non-functional expectations

Capability, Quality and Performance of Offshore IS Vendors: A Theoretical Framework and Empirical Investigation.

Information systems (IS) offshoring has become a widespread practice and a strategic sourcing choice for many firms. While much has been written by researchers about the factors that lead to successful offshoring arrangements from the client's viewpoint, the vendor's perspective has been largely scarce. The vendor perspective is equally important as offshore IS vendors need to make important decisions in terms of delivering operational and strategic performance and aligning their resources and processes in order to meet or exceed targeted outcomes. In this article, we propose and test a three-level capability–quality–performance (CQP) theoretical framework to understand vendor outcomes and their antecedents. The first level of the framework represents three vendor capabilities: relationship management, contract management, and information technology management. The second level has three mediating variables representing process quality: partnership, service, and deliverable quality. The third level has three dependent variables representing vendor outcomes: operational performance, strategic performance, and satisfaction. The model was tested with 188 vendor firms from India and China, the two most popular destinations for IS offshoring. Results support the CQP framework; vendor capabilities are significant predictors of intermediate quality measures, which in turn affect vendor outcomes. Implications of the study findings to both theory development and IS offshore vendor strategic decision making are discussed

Moving Towards an Integrated Framework of IT-Outsourcing Success

Offshore information technology outsourcing is a popular strategic choice for businesses today. Firms are increasingly outsourcing their complex information technology-based projects, business processes, and services to offshore locations to achieve competitive advantage. Traditionally, offshore information technology outsourcing was a means to reduce costs and/or increase efficiencies by focusing on core activities. Recently, the emphasis has shifted to pursuing it as a strategy for cooperative advantage through resource sharing and building long-term relationships with the offshore partners. However, many such offshore outsourcing relationships fail due to a lack of understanding and proper operationalization of the critical success factors that influence global client–vendor partnerships. In the current study, the authors draw upon existing literature to identify popular theoretical perspectives and key operational, environmental, and relational factors influencing the success of offshore information technology outsourcing relationship. A framework of offshore information technology outsourcing success is then developed by integrating these theoretical perspectives and critical success factors. Exploratory data suggests that the proposed framework is valid for understanding offshore information technology outsourcing success and has important implications for theory and practice

Factors Influencing Knowledge Transfer in Onshore Information Systems Outsourcing in Ethiopia

Knowledge transfer in onshore information systems (IS) outsourcing projects in Africa is an important but under-researched phenomenon. This study focuses on the client-vendor perspective and examines the factors that influence knowledge transfer in onshore information systems outsourcing in Ethiopia. Conceptually, knowledge-based perspectives of IS outsourcing is used to identify an initial set of factors to frame the empirical study. This is followed by semi-structured interviews with ten project managers. The findings indicate that five key factors, namely mutual absorptive capacity, mutual learning intent, mutual trust, mutual disseminative capacity and project staff turnover influence knowledge transfer in outsourced IS projects. The results suggest that development and management of the resources, processes and behaviors implied by these factors are vital to ensure successful inter-organizational knowledge transfer and to reverse or minimize the failure rates of outsourced IS projects. The study concludes with implications for research and practice

Leveraging Offshore IT Outsourcing by SMEs through Online Marketplaces

Following their larger counterparts, an increasing number of small firms outsource their IT tasks to lower cost offshore destinations. For small firms, however, offshore outsourcing is a difficult undertaking as it involves high transaction costs. Online marketplaces for IT services, which have recently become available to small firms, make offshore IT outsourcing more accessible and manageable, although differences in the marketplace design result in varying outcomes across the marketplaces. This has consequences for SME’s decision as to which online marketplace to use, because different markets may have different types of benefits and costs. This paper sets to analyze some of the similarities and differences between online marketplaces for IT services and their effects for small firms. First, we analyze if and how online marketplaces reduce small firms’ transaction costs in offshore IT outsourcing. Second, we examine the effects of market entry barriers on outcomes of online marketplaces and their implications for small firms. The results indicate that online marketplaces for IT services do reduce transaction costs for small firms in offshore outsourcing across ten specific market processes. More surprising, however, is the finding that the lower market entry barriers for suppliers result in lower prices for buyers without compromising other aspects of market performance.Offshore IT Outsourcing;Online Market;Process-Stakeholder Analysis;Reverse Auction

An investigation of knowledge transfer in information systems (IS) outsourcing

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.Inter-organisational knowledge transfer is of central interest both as an academic topic and in business practice. However, despite the attention given to the importance of this subject from different perspectives in various contexts, little is known about how knowledge is transferred from vendors to clients in information systems (IS) outsourcing. This research attempts to address this apparent theoretical and empirical deficiency by providing a deeper understanding and more holistic analysis of the key factors which facilitate or inhibit knowledge transfer success in IS outsourcing. This study employed a qualitative, multiple case study approach in the interpretive paradigm. Data was collected mainly from the IS departments of three public sector organisations in Oman. Oman was chosen as the context for the study due to its rapid growth in recent years and the opportunity to consider the many major IS outsourcing projects which have been undertaken by its public sector. Through semi-structured interviews, this study explored the perspectives of the internal IS staff on their experience of knowledge transfer and learning from vendors through various IS outsourcing projects. Written and electronic documentations as well as non-participant observations also served as important triangulation and complementary sources in understanding the phenomenon being studied and as means of gaining additional perspectives and further insights on key issues. The empirical evidence demonstrated that there are five sets of factors which facilitate or inhibit knowledge transfer success in IS outsourcing. These are: knowledge (knowledge tacitness and knowledge complexity), client (learning intent, absorptive capacity and motivation), vendor (vendor capability, vendor credibility and vendor openness), relationship (relationship quality, relationship duration, relationship governance and organisational distance) and knowledge transfer mechanisms (formal and informal). The findings of this study contributed and extended the growing body of research on IS outsourcing by developing a novel, holistic conceptual framework which examined five sets of factors that impact knowledge transfer success. Additionally, it provided prescriptive value for practitioners seeking to realise efficient and effective knowledge transfer in IS outsourcing

Critical Issues of IT Outsourcing Vendors in India

Global outsourcing of IT and IT-enabled services (ITES) has now become an accepted corporate strategy of a vast majority of firms around the world. The functions being offshored have increased in scope and magnitude and have climbed the value chain ladder. However, the literature has overwhelmingly focused on client-centric issues to the neglect of vendor concerns. There is a rich tradition of ranking critical issues confronting Information Systems executives, and some studies have even explored critical issues of outsourcing clients. These rankings have significant implications for both researchers and practitioners. Our study focuses on the nascent area of IT outsourcing vendors. We examine the issues from the standpoint of IT outsourcing vendors in India, currently the primary destination for IT offshoring. The results suggest that for the Indian vendors, the most critical issues are not related to cultural, language, and time-zone differences as suggested in many writings. Rather, the most critical concerns are issues dealing with work arrangements and relationships with the client, and issues related to the client’s organizational readiness for offshoring. Clearly the understanding of such issues is important to the vendors, but also to the clients in order to maintain an effective dyadic relationship