IS offshoring: a proposed maturity model of offshore IS suppliers

Companies in developed economies are now accustomed to use offshore IS services to develop and maintain software, and an increasing number of specialist offshore services firms exists to meet the demand. These include systems integrators whose origins are in developed economies, and ‘pure play’ offshore IS providers that originate in countries where the cost of IS labour is relatively low. Both type of offshore organisation have changed considerably in recent years in response to market demand and competitive pressure. Although researchers have developed maturity models for users of IS offshoring, there is little that describes the nature and behaviour of offshore IS providers. Accordingly, this paper proposes a maturity model for offshore IS suppliers that is analogous to various consumer-oriented maturity models found in the literature and in trade journals. This preliminary framework is developed by reference to literature on outsourcing, offshoring and IS maturity models, and by recent relevant experience of practitioner organisations. The conclusions from this study can be used to guide further research, and to develop constructs helpful to practitioners. The research helps suppliers of offshore IS services to understand the particular conditions in which it is appropriate to consider new business models. For consumers of offshore outsourcing, it provides a framework for categorising suppliers of IS services

Outsourcing of Information Systems as a Strategy for Organizational Alignment and Transformation

Outsourcing of services is usually viewed as a way to increase or decrease capacity at the margin. By outsourcing a firm can vary its ability to provide goods or services such as information technology (IT) processing capacity or applications development, without taking on the long term commitment of permanent staff or equipment Today, outsourcing provides new options for managers to provide information technology infrastructures and services to a firm. In this paper we identify ways in which outsourcing may be used tactically to better align business and information technology strategies. Specifically, we consider how selective outsourcing enables alignment of incentives, business revenues and IT infrastructure costs, and how organizational intent can be made more consistent with a firm' s capabilities. We propose that outsourcing as an information systems management strategy can enable better control and lower agency costs as managers benefit from better information through external benchmarking. We also consider the role of outsourcing as a vehicle to support major organizational transformation, and as a device for enabling new models of organization. Based on our analysis we propose a series of testable propositions about outsourcing. The contributions of this paper include extension of business strategy and information technology alignment concepts to incorporate the interdependence between projects, product life cycles, and technology transfer. Most importantly, the paper highlights new directions for outsourcing research, focusing on the effects of outsourcing on the IT organization, the processes of internal technology development and the transfer of technologies between organizations.Information Systems Working Papers Serie

Investigating the Information Systems Heterarchy

This article assesses how one IS organization is changing in response to the increased globalization of software development and posits the emergence of a new form of multi-national enterprise (MNE)—the heterarchy. Data from two projects create new insights into the structures and behaviors of ISMNEs as they adapt to global systems development. The article identifies four primary dimensions of impact—cultural, economic, operational, and organizational—and suggests how such organizations are evolvin

Outsourcing in Today's Economic Environment

An economic phenomenon that is defined by the movement of industrial activity from developed to emerging nations has occurred during the past two decades. This technique may be seen as the huge firms' solution to the issue of production costs that were steadily growing along with rising living standards and compensation. This paper seeks to study outsourcing from the standpoint of its evolution as well as the benefits and drawbacks that come with it. On the other hand, this research essay aims to define the concept's foundations and explore its applicability to the public sector. Overall, research on outsourcing has shown that outsourcing can provide significant benefits in terms of cost savings, flexibility, and quality, but it also presents challenges in terms of managing relationships, maintaining control, and managing the human resources aspects of outsourcing. Companies need to carefully consider the potential benefits and risks of outsourcing before deciding whether to outsource specific functions or processes

Complementary IT resources for enabling technological opportunism

This study examines the use of information technologies (ITs), IT human capital, the level of IT vendor support, and their joint effects on firm''s sensing and responding to IT changes (technological opportunism). Using data from the U.S. and Spain, the results suggest that IT use and the firm''s IT human capital are the main drivers of technological opportunism (TO). The effect of IT vendor support on TO is country dependent, with a U-shaped effect in the U.S. and no effect in Spain. IT vendor support can have positive effects on TO if the firm invests in IT human capital

Systemic Determinants of the Information Systems Outsourcing Decision: A Comparative Study of German and United States Firms

The practice of information systems (IS) outsourcing is widely established among organizations. Nonetheless, evidence suggests that organizations differ considerably in the extent to which they deploy IS outsourcing. This variation has motivated research into the determinants of the IS outsourcing decision. Most of this research is based on the assumption that a decision on the outsourcing of a particular IS function is made independently of other IS functions. This modular view ignores the systemic nature of the IS function, which posits that IS effectiveness depends on how the various IS functions work together effectively. This study proposes that systemic influences are important criteria in evaluating the outsourcing option. It further proposes that the recognition of systemic influences in outsourcing decisions is culturally sensitive. Specifically, we provide evidence that systemic effects are factored into the IS outsourcing decision differently in more individualist cultures than in collectivist ones. Our results of a survey of United States and German firms indicate that perceived in-house advantages in the systemic impact of an IS function are, indeed, a significant determinant of IS outsourcing in a moderately individualist country (i.e., Germany), whereas insignificant in a strongly individualist country (i.e., the United States). The country differences are even stronger with regard to perceived in-house advantages in the systemic view of IS professionals. In fact, the direction of this impact is reversed in the United States sample. Other IS outsourcing determinants that were included as controls, such as cost efficiency, did not show significant country differences

Strategic innovation in information technology outsourcing: identifying the gaps between vendor contribution and client requirement

While much research has focused on information technology (IT) outsourcing, little research has concentrated on how a vendor's offerings fit into the strategic vision of its client company. This research identifies the areas in which client companies expect information technology (IT) outsourcing vendors to make contributions to their strategic innovation. Through case studies and a literature review, this research offers insights into each IT outsourcing party's definitions and perceptions of innovation, how client and vendor companies formulate and implement innovation, and each party's expectations in outsourcing for innovation. Case studies of client and vendor organizations engaged in IT outsourcing arrangements and a review of the service level agreement literature yielded the following findings: (1) client companies present certain challenges to vendors that are trying to innovate in their organizations, (2) vendors must determine how to bridge the gap between the client's current IT organization and the client's desired result, (3) certain traits must be present in client companies in order for them to realize innovation through IT outsourcing arrangements, and (4) certain contractual elements are instrumental in ensuring that the client's innovation requirements are met

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

An investigation of the partnering strategies in application service provision: A vendor perspective

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.This research aims to investigate the partnering strategies in Application Service Provision (ASP) from a vendor's perspective. Although some attention was recently given to the ASP model, the main focus of the published academic work was essentially on the customer's side. This research focuses on ASP vendors, and aims at studying the partnering strategies used by these in order to source the different ASP model components. From the studied literature, it was found that the ASP model relies on 4 main infrastructural layers for delivering services: the data storage layer, the server layer, the network layer, and the application layer. Due to the different nature of each of these layers in terms of the required technology, it was concluded that ASP is a complex service, for which the required resources and capabilities are unlikely to be owned by one single company, thus the importance of studying the partnering strategies needed for ASP vendors. Through the use of Transaction Cost Economics (TCE) and the Resource-based View (RBV), predictions were made about the expected sourcing modes (market, integration, or strategic alliance) for each of the ASP layers. The next phase was to study six ASP cases, in which the partnering strategies of each firm for each ASP layer were studied. The main result from this analysis was that the actual outcomes from the case studies did not fully match the predictions that were initially made. A cross-case analysis was then undertaken by reapplying TCE and RBV to the studied cases. In this phase, for each ASP layer in each case study TCE and RBV attributes were investigated, and the drawn conclusions were two fold. First, the initial assumption that the software layer is the core layer of the model, based on which the predictions were made, was rather flawed; it was found that although many ASP vendors draw value from the application layer, several others rely on other ASP layers. Secondly, it was concluded that the two used theories - TCE and R-BV - did not, independently, explain all the actual sourcing modes of the studied ASP vendors, though RBV showed more explanatory power than TCE. Furthermore, it was demonstrated that the combination of TCE and RBV, in the context of this study, offers more explanatory power than if the two theories were used independently. Although this is an important finding in the context of ASP, the implications on IS research is tremendous, where multiple-theory applications are increasingly called for

Development and validation of a conceptual framework for IT offshoring engagement success

“A thesis submitted to the University of Bedfordshire, in partial fulfilment of the requirements for the degree of Doctor of Philosophy”.The study presented in this thesis investigates Offshore Information Technology Outsourcing (IT offshoring) relationships from clients’ perspective. With more client companies outsourcing their IT operations offshore, issues associated with the establishment and management of IT offshoring relationships have become very important. With the growing volume of offshore outsourcing, the numbers of failures are also increasing. Therefore, both clients (service receivers) and suppliers (service providers) face increasing pressure to meet with the objectives of IT offshoring initiatives. Improving the quality of the relationship between client and supplier has frequently been suggested in the literature as probable solution area, however not much literature and empirical evidence is available in this respect. The aim of the study is to make a theoretical and practical contribution by studying the interplay between the critical factors influencing the relationship intensity level of the exchange partners and suggest measures that can potentially increase the success rate in IT offshoring engagements. The objectives of this study are: 1. To identify the relevant critical factors and explore its causes and effects (antecedents and consequences) on the relationship intensity significance level. 2. To develop an integrated conceptual framework combining the hypothetical relationship among these identified critical factors. 3. To empirically validate the conceptual framework. To accomplish the first objective and building the theoretical platform for the second objective, three research questions are identified and answered through empirical study backed by literature evidence. The second objective is addressed through an integrative conceptual framework by analysing the related studies across other disciplines, gaps in the existing theories and models in the outsourcing literature. Coupled with literature gap analysis, the researcher adopted some of the relevant features from across various disciplines of management and social sciences that are relevant to this study. After that, the third objective, the research hypotheses are validated with empirical examination conducted in Europe. Seven research hypotheses are developed based on literature analysis on the relationship of the key constructs in the conceptual framework. This study is explanatory and deductive in nature. It is underpinned mainly by a quantitative research design with structured questionnaire surveys conducted with stratified sampling of 136 client organisations in Europe. Individual client firm is the unit of analysis for this study. Data analysis was conducted using partial least squares (PLS) structural equation modelling techniques. In this research, empirical support was found for most of the research hypotheses and conclusions of the study is derived. An investigation into trust as a concept is used to denote relationship intensity, as the central construct of the framework. The validated conceptual framework and tested hypothesis results are the main contributions of this study. The results of this study will also be useful in terms of adopting the conceptual framework linked with hypotheses as a point of reference to begin with, in order to accomplish a healthy exchange relationship. However, a further deep dive and fine tuning the sub-units/composition characteristics of each critical factor may be needed for individual outsourcing initiative(s). This study is particularly relevant to the client-supplier firms already engaged in a relationship but can also be useful to those clients who are planning to begin their journey in IT offshoring in the near future, as a preparatory platform