The Role of Alignment Capability in Strategic IS Outsourcing Success

Strategic Information Systems outsourcing refers to the long term outsourcing of systems with a major transformational impact on the client’s business strategy. Such outsourcing arrangements mitigate risks through closely aligned client and vendor business/IT operational processes and shared strategic vision. Strategic outsourcing arrangements rely on both contractual and relational governance to build inter-firm alignment capability. This research paper defines a multi-item measure of clientvendor alignment capability, and uses that instrument to survey a number of North America based oil and gas exploration and energy producing firms, who have undertaken the outsourcing of strategic information systems to an Indian information systems vendor. The results indicate which elements of contractual and relational outsourcing governance support the building of client-vendor alignment and whether alignment capability improves outsourcing success factors

Diverse virtual social networks: Implications for remote software testing teams

This paper evaluates offshore outsourcing in the IT testing industry and determines what conditions determine its success. There is particular focus on the influence of diversity in teams on group relationships. Two studies are described: the first, investigated the perceptions of professional software testers on the critical factors of offshore outsourcing; and the second study looked at the ability for diverse teams to form close working relationships through virtual networks. We find that overt diversity factors inhibit interaction across nationality boundaries. The limitations of virtual networks for fostering personal communications is apparent in preventing group members from overcoming the initial aversion to mix with out-group members, which could be achieved with closer and more personal communications between members with different diversity factors in normal face to face communications. Where software testing teams are outsourced globaly, and must rely on virtual communications, there seems potential for significant difficulties in developing close working relationships, which on the one hand, can be negative for group cohesion, but one the other hand, can be positive for encouraging imparitality

Governance of Offshore IT Outsourcing at Shell Global Functions IT-BAM Development and Application of a Governance Framework to Improve Outsourcing Relationships

The lack of effective IT governance is widely recognized as a key inhibitor to successful global IT outsourcing relationships. In this study we present the development and application of a governance framework to improve outsourcing relationships. The approach used to developing an IT governance framework includes a meta model and a customization process to fit the framework to the target organization. The IT governance framework consists of four different elements (1) organisational structures, (2) joint processes between in- and outsourcer, (3) responsibilities that link roles to processes and (4) a diverse set of control indicators to measure the success of the relationship. The IT governance framework is put in practice in Shell GFIT BAM, a part of Shell that concluded to have a lack of management control over at least one of their outsourcing relationships. In a workshop the governance framework was used to perform a gap analysis between the current and desired governance. Several gaps were identified in the way roles and responsibilities are assigned and joint processes are set-up. Moreover, this workshop also showed the usefulness and usability of the IT governance framework in structuring, providing input and managing stakeholders in the discussions around IT governance

Electronic Alliances: Outsourcing for Competitive Advantage

While several studies have examined the role of strategic alliances in outsourcing, as a way to manage the client-vendor relationship, no systematic attempt has been made to integrate the knowledge from the strategic management literature. The study contributes to this line of research, by developing a framework that weaves the Relational-Theory View with the outsourcing literature. This synthesis leads to the proposition that the more an outsourcing alliance meets the conditions of Relational-Theory, the higher the rent generating potential for the partners. Specific scenarios are generated based on the strategic value of the considered process, as well as the existence and the visibility of the appropriate capability

Understanding transition performance during offshore IT outsourcing

Purpose - Within an IT outsourcing relationship, transition represents a critical and complex phase that starts immediately after contract signing. Transition involves handing over outsourced activities from client firm to service provider firm and accompanies a new way of operating. The purpose of this paper is to determine and detail factors influencing the performance of transition phase within global IT outsourcing relationships. Design/methodology/approach - In this paper, the authors present a framework for transition performance that includes four factors: transition planning, knowledge transfer, transition governance and retained organization. This framework is tested and enriched by utilizing a single, in-depth case study involving over 25 interviews with a global offshore IT outsourcing engagement. Findings - It was found that knowledge transfer and transition governance are more critical factors than transition planning and retained organization for transition performance. This was due mainly to two reasons: the critical challenges faced, within the scope of these factors, had higher potential to disrupt transition; and both these factors and their related issues required a significant joint and coordinated effort from client and service provider firms, thereby, making implementation challenging for transition. Originality/value - Practitioners have suggested that over two-thirds of failed outsourcing relationships are due to transition-related challenges. This paper represents one of the first in-depth studies that provides insights from a real-life global outsourcing engagement, which contributes to and complements existing literature on IT outsourcing by providing a greater understanding of transition. Furthermore, it provides practitioners with insights and best practices that can be used to guide transitions in real-life engagements

Control Perception Differences in IS Offshoring Projects: Conceptualization and Empirical Test of Performance Impact

This paper takes a novel approach to IS project control by studying control perceptions of clients and vendors in IS offshoring projects and the implications of their perceptions for project performance. We present the results of a survey-based analysis of 46 client-vendor dyads involved in IS offshoring projects. A major contribution of this study lies in operationalizing and empirically testing attempted control (control perceived by the client) and realized control (control perceived by the vendor). Based on prior research, we employ a relational governance view to test whether control perception differences decrease IS project performance. Building on transaction cost economics, we then develop and test the rival perspective that control perception differences may improve performance. Our data support the view that perception differences can be beneficial for IS offshoring project performance

Framework to address Organizational Gaps and Build Knowledge Management Capabilities in Offshore KPO

Many organizations are pursuing knowledge process outsourcing (KPO) to offshore locations. Successful KPO requires developing robust inter organizational knowledge management capabilities (KMC). However, “organizational gaps” that originate from (i) structural differences between the client and vendor’s operating procedures and (ii) cultural differences in the cultural proclivity of the individual workers can hinder building this KMC. To close these gaps and build robust KMC, effective organizational practices are needed that build social capital. Using a field study of a set of knowledge intensive support processes that were outsourced by an US based client to an Indian vendor, this research finds the benefits of building social capital in the form of norms, trust and identity among the workers in the organization through three types of organizational practices –bridging, bonding and linking. These practices helped reduce the organizational gaps and created social capital that was found to increase KMC

Information Systems Offshoring—A Literature Review and Analysis

IS offshoring has become one of the most discussed phenomena in IS research and practice. Particularly due to its rapid evolvement, current research on IS offshoring lacks a consolidated view on existing results. The article at hand seeks to meet this need by systematically reviewing and analyzing prior academic literature on IS offshoring. Based on a review of top-ranked IS and management journals as well as IS conference proceedings, we compile an exhaustive bibliography of ninety-six publications solely focusing on IS offshoring from a (project) management perspective. To adequately address the immense diversity of these publications, a multi-perspective research framework consisting of three perspectives, namely, research focus, research approach, and reference theory, is introduced and forms the basis for our literature analysis. The analysis results confirm the appropriateness of our framework and reveal directions for future research along the framework perspectives: Most importantly, in an effort to increase the significance and the trustworthiness of their results, researchers should apply a more theory-driven approach and provide a better description of their research context. Moreover, future research needs to pay particular attention to the pre-implementation stages of an IS offshoring initiative as well as the special nature of nearshoring and captive offshoring. Across all project stages, researchers should not only concentrate on the client point of view but incorporate multiple points of view

The Role of Client-internal Social Linkages for Outsourcing Success – An SNA Approach

What is the role of a firm’s internal social relations between business departments and IT unit for the success of its IT outsourcing relationship? In this paper, we propose that the relationship between business and IT of a firm is crucial for achieving effective outsourcing management and for enabling the vendor to deliver the services as demanded. Since the business side of the client firm represents the users of the information systems but the IT unit represents the interface to the outsourcing vendor firm, interaction between both units is proposed to be required for maintaining a good outsourcing relationship. Based on a survey in the German Banking Industry and by adopting a Social Network Analysis Approach which captures the interaction structure within the client firm and thus represents an innovative scale to outsourcing research, we show that tight social linkages within the client firm lead to higher service quality achieved by the vendor firm