Academic literature on the topic 'Information Technology Offshoring'

ABSTRACT: We investigate profitability, operating cash flows, and value relevance associated with offshoring arrangements of technology-oriented jobs. Offshoring is the business practice of moving substantial portions of a firm's business operations (and jobs) to another country usually to take advantage of lower labor costs or other production factors in developing countries. Offshoring carries social costs as local jobs are lost which may limit realization of benefits. We find that firms that offshore technology-oriented jobs report greater earnings and operating cash flows following an offshoring event as the relative size of the offshoring arrangement increases. Consistent with these results, the market only values offshoring beyond the impact recognized in the financial statements for larger offshoring arrangements. A valuation discount actually exists for smaller offshoring arrangements suggesting either (1) costs exceed potential benefits or (2) the perception that benefits are only realized through economies of scale. We document both benefits and costs that are important for those firms considering offshoring arrangements and their stakeholders.

Using firm-level data on offshoring of Korean manufacturers, this paper examines the relationship between firm heterogeneity and the probability of adopting offshoring. The results of the paper suggest that firm productivity may not be an important determinant for Korean firms' offshoring decision. A firm's global sourcing decision may rather depend on other characteristics such as factor intensity, research and development (R&D) intensity, information and communication technology (ICT) level, and affiliation with foreign markets when industry specificity is controlled for.

Purpose This paper aims to propose a new theoretical perspective on the organizational design of offshoring service organizations by adopting an information processing perspective which incorporates the factors of collaborative information technologies, task commoditization and global customer service delivery that are characteristic of modern-day knowledge-intensive service (KIS) organizations. Design/methodology/approach The authors analyze data from a large multiyear survey of offshoring service providers conducted in 12 countries. Findings The authors show how use of collaborative technology is significantly and positively related to spatial and configurational dispersion, task commoditization is significantly and positively related to spatial and temporal dispersion and need for global customer presence is not related to spatial, temporal or configurational dispersion. Research limitations/implications The paper integrates concepts from management information system (MIS), operations management and international business to show how collaborative technology, task characteristics and customer service requirements affect the global dispersion of KISs. Practical implications The results show how use of collaborative technology, task characteristics and global customer service requirements need to be jointly considered in the global dispersion of activities by KIS providers. Originality/value The study sheds light on the effect of the key factors on different dimensions of global dispersion (i.e. spatial/temporal/configurational dispersion) in offshoring service provider organizations. Second, it shows how the traditional information processing perspective on organizations can be updated and applied to KIS organizations by incorporating the factors of global collaborative information technologies, task commoditization and global customer service.

This article investigates the differences across and the need to consider both the client and vendor perspective in evaluating international sourcing (offshoring) success and highlights the need for incorporating relational factors into the success assessment rather than focusing solely on financial or operational outcomes (e.g., projects delivered on time, within budgeted costs). We take an expanded view of project success (using relational/process dimensions) and provide insight into how client and vendor firms evaluate success differently across relational dimensions and how relational factors play a key role in achieving success. Based on the findings, propositions are presented to guide future offshoring success research.

Spending by U.S. companies in offshore IT services continues at unprecedented levels despite a high failure rate. This study fills a gap in the existing literature by examining the client-vendor offshoring relationship through the theoretical lens of social exchange theory at the organizational level of analysis from the client's perspective. Social exchange theory focuses on the exchange of activities between two parties, whether they are individuals or companies and was used as a basis for examining the client and vendor relationship. Variables were identified by a review of the literature primarily from IT outsourcing and offshoring but also from general IT, marketing, sociology and organizational science literature. Data was collected using a field survey of Fortune 500 CIOs representing a population of organizations at the forefront of the offshoring phenomenon. The survey instrument was developed based on the adaptation of previously validated scales. Hypotheses regarding the correlations between social variables such as trust, communication, dependence, power, shared values and offshoring success were tested using Spearman's rho correlation. Seven of the hypotheses were supported, four hypotheses were not supported and one hypothesis was deemed not testable due to lack of information.

This thesis examines the impact of governance process development on engagements between onshore and offshore subsidiaries of multinational IT services organisations. Offshoring is a significant global phenomenon. Over the last decade, there has been substantial growth in the number of organisations setting up ‘captive’ (wholly owned subsidiaries) centres in offshore locations. The desired benefits of greater coordination, leveraging and sharing of knowledge have, in many instances, failed to materialise for these IT services organisations. These failures arise from a variety of causes including a lack of intra-organisational processes to coordinate and manage work, weak alignment between the parent organisation’s strategic objectives and those of the subsidiary, and the inability to navigate cross-organisational and cultural barriers. This thesis comprises three interrelated projects. The first established that organisations develop offshore subsidiaries in order to obtain one or more of a number of complex and interrelated set of strategic objectives. The second project, through the use of grounded theory, demonstrates that within one IT services organisation, imposed governance processes do not facilitate communication and engagement between the onshore and offshore subsidiaries. Cross-cultural and organisational differences inhibited the engagement between the subsidiaries, thus contributing to the failure to achieve the desired benefits of offshoring. Organisations engaged in captive offshoring are faced with two apparently contradictory sets of issues: a set of highly desirable and interrelated strategic benefits and a variety of operational challenges that arise from the imposed nature of the governance processes. The third project, a case study of a similar IT services organisation, examines how these apparently contradictory issues were resolved. The results show that it is the co-development and implementation of governance processes based on the informal working practices of both the onshore and offshore teams that enable the operational challenges established in the second project to be resolved and thus provide reconciliation between these and the achievement of the strategic benefits that drive offshoring. This thesis concludes that co-developed and implemented governance processes are a key factor in the mitigation of the deleterious effects of cross-organizational and cultural working and adds the notion of co-development and implementation of governance processes to the academic literature on the governance of outsourcing.

More than half of information technology (IT) outsourced projects fail, primarily due to a lack of effective management practices surrounding the outsourcing end-to-end process. Ineffective management of the IT outsourcing (ITO) process affects organizations in the form of higher than expected project costs, including greater vendor switching or reintegration costs, poor quality, and loss of profits. These effects indicate that some business leaders lack the strategies to effectively manage the ITO process. The purpose of this single-case study was to apply the transaction cost economics (TCE) theory to explore strategies 5 business professionals use to manage an ITO project in a financial services organization located in the Midwestern region of the United States. Participant selection was purposeful and was based on the integral role the participants play on the ITO project. Data collection occurred via face-to-face semistructured interviews with the participants and the review of company documents. Data were analyzed using inductive coding of phrases, word frequency searches, and theme interpretation. Three themes emerged: vendor governance and oversight, collaborative strategic partnership, and risk management strategies enabled effective management of ITO. Identifying and executing appropriate outsourcing strategies may contribute to social change by improving outsourcing infrastructure, which might support job creation; increasing standards of living, especially within emerging markets; and heightening awareness of different cultures, norms, and languages among people living in different regions around the world to establish commonalities and gain alignment with business practices.

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.

Thesis (Ph.D.)--Management, Georgia Institute of Technology, 2008.
Committee Chair: Narasimhan, Sridhar; Committee Member: Li, Haizheng; Committee Member: Slaughter, Sandra; Committee Member: Thursby, Marie; Committee Member: Zhang, Han.

Western countries' information technology and software intensive firms are increasingly producing software and IT services in developing countries. With this swift advancement in offshoring, there are many issues that can be investigated which will enable companies to maximize their benefits from offshoring. However, significant challenges can occur throughout the lifecycle of offshoring IT service projects that turn the potential benefits into losses. This research investigated CMM/CMMI best practices and their effects on managing and mitigating critical issues associated with offshore development. Using a web based survey, data was collected from 451 Information Technology and software development firms in the US. The survey instrument was validated by an expert panel which included practitioners and researchers. The survey population consisted of Information Technology and software engineering managers who work on offshore IT and software development projects. Statistical methods including Chi Square and Cramer's V were used to test the research hypotheses. The results of the analysis show that IT companies applying CMM/CMMI models have fewer issues associated with IT offshoring. When US IT companies utilize and incorporate different practices from TSP and People CMM into CMMI for DEV/SVC and CMMI for ACQ, they have fewer offshoring issues related to language barriers and cultural differences. The results of this research contribute to the existing body of knowledge on the offshoring of IT services from the client management perspective and provide practitioners with increased knowledge regarding IT offshoring decisions.

M.Com. (Business Management)
The opportunity to create a case where students can apply their knowledge and insight pose a number of challenges. The purpose of this study was to create a case study that encapsulates various management opportunities and dilemmas that businesses face on a daily basis and explore possible questions and solutions, as well as reflect on the output ofthe process. This mini-dissertation starts by orientating the reader regarding the objective of the study, method followed and academic overview. It includes an overview of the evaluation criteria required to test the use and applicability of the case study. The case study "SwisslT: New horizons in stormy waters" is presented with a number of critical questions. A facilitation manual follows the case study and provides a structured grouping of the questions, an overview of didactic principles and discusses possible answers. The dissertation concludes with an evaluation of the case study and the answers by summarising the input received from facilitators, practicing managers and a management consultant. The conclusion drawn from this study is that the utilisation ofcase studies and the case method is not limited to only being a teaching tool. The process ofcreating and evaluating a case has value in itself. It not only supports the constructivist approach to teaching, but it also creates a platform for the identification offuture research topics as incorporated at the end of this study.

Weathering turbulent economic environment in the past decade, the global Information, Communications Technology industry is restructuring and the low-income nations are becoming the major suppliers in it. This study aims to assess the attractiveness of South Africa as an outsourcing location for IT services. The idea for the study emerged from a preliminary research on the topic. As a result it became evident that the topic is not fully covered yet. Therefore, the study is exploratory in its nature, where the fieldwork and the data collection are the main building elements in the theoretical propositions. This study emphasizes on the concept of outsourcing practice, the relevant benefits and constrains, and the motivation of the companies to pursue an internationalization strategy. The macro-economic analysis depicts the relevant trends that affect the performance of ICT sector in South Africa and the factors that shape the national competitiveness. In pursue to confirm the validity of the findings, the opinion of three local IT companies is collected in the form of in-depth interviews. Based on the previous findings, a general recommendation about the attractiveness of South Africa is prepared. The study suggests that South Africa has the potential to emerge as an attractive location for outsourcing of IT services. The outcomes aims to attract the attention of both scholars and business practitioners in pursue to serve as a prelude for future, more extensive, researches.
Ao passar por tempos económicos tempestuosos na última década, a industria global de informação, telecomunicações e tecnologias encontra-se em processo de reestruturação e as nações de baixos rendimentos convertem-se nos maiores fornecedores nela. A presente investigação visa avaliar a atracção da África do Sul como lugar de outsourcing para os serviços IT. A ideia da investigação surge do estudo preliminar do tema. Como resultado tornou-se claro que o tema não está ainda bem desenvolvido. Eis porque a investigação é de exploração) pelo seu carácter, onde os estudos de campo e a colheita de dados são os principais elementos edificadores nas propostas teóricas. A presente investigação sublinha o conceito da prática de outsourcing, as respectivas vantagens e limitações, bem como a motivação das empresas de implantação da estratégia de internacionalização. A análise macroeconómica ilustra as respectivas tendências que influem na apresentação do sector IKT na África do Sul e nos factores que formam a competitividade nacional. Para confirmar a validez dos resultados, as posições de três companhias IT locais foram recolhidas sob a forma de entrevistas aprofundadas. Com base em constatações anteriores foi elaborada una recomendação geral sobre a atracção da África do Sul. O estudo sugere, assim, que África do Sul tem potencial para emergir como uma localização atractiva para outsourcing de serviços de TI (Tecnologias de Informação). O estudo visa atrair a atenção tanto dos cientistas como dos círculos de negócio e servir de preâmbulo para as futuras investigações mais amplas.

Over the recent decades, the changes in the paradigm of international trade have been observed. As the result of decreasing of trade barriers as well as the reduction in trade costs allowed companies to divide their production into stages and to locate it in different countries according to their competitive advantage. Eventually, the production process has become more fragmented, both geographically and vertically. It means that intermediate products are shipped across boarders many times and every exporting economy provides some value added according to its competitive advantage. As a result, global value chains have become one of the most important feature of international trade. Following (Gereffi & Fernandez-Stark, 2011), in this study global value chains are defined as “the full range of activities that firms and workers do to bring a product from its conception to its end use”. Humphrey and Schmitz (2002) pointed out four types of upgrading in global value chains: product, process, functional and chain. Product and process upgrading involve companies retaining their positions in global value chains by enhancing productivity gains through adopting new product processes or “new configurations of product mix”. Thus, functional upgrading involves a slicing up the global value chains into new activity which generates higher value added, e.g. own brand manufacturing. In turn, chain upgrading involves a going up to new activity, which needs higher skills and capital and value added. Milberg and Winkler (2013) offered similar classifications of upgrading. Production fragmentation has caused a rapid increase in trade in intermediate goods as often companies offshore an intermediate stage of production process. Offshoring production has been typical to manufacturing (Timmer, et al., 2012), however, services have been often overlooked, but play a major role, especially in supporting global value chains (Kommerskollegium 2013). In turn, Digital Silk Road, announced in 2015, has become a significant part of Chinese Belt and Road Initiative strategy. China has implemented this strategy as a part of its long-term technological plan, under which China provides support to its exporters, including many well-known technology companies and builds a network of cooperation with selected countries in the field of technology, including ICT infrastructure, services, 5G networks, e-commerce, etc. China's rapid technological changes must not go unnoticed by trading partners, including analysed European countries, which, to maintain international competitiveness, are increasing the technological advancement and enhancing market protection against Chinese technology. Until recently, the value added from China to European countries was concentrated mainly on medium technology industries and value added from Europe to China focused more on advanced goods and services. Nowadays, there is a redirection of Chinese value added to high-tech activities (including service activities), which reflects China's ambition to build an economy that leads to innovation and industry 4.0. The transition of the CEE states’ economic and political systems initiated in the early 1990s, earned them the EU membership in 2004. The accession to the EU’s structures meant that these countries achieved the free-market economy status and they should be treated as the full member of the global business networks. Moreover, the decline in trade costs (transport and transaction), greater openness of their market and the removal of trade barriers have all helped the CEE states to join global value chains. Hence, the CEE economies are going to be more heavily involved in global production linkages. Many empirical studies have presented the close and dynamic integration of these countries with the EU market (especially the EU-15) and in a more limited scope with the whole global economy as well (Behar and Freund 2011). Generally, democratisation, the strengthening of political and economic relations (particularly with the EU), and the modernisation of many sectors (including financial sector, more advanced industries), were common elements of the CEE countries long-term development policies. One of their priorities was the redirection of foreign trade towards the EU and joining the global production linkages where China has become the core producer. Recently, the role of the economy in global value chains is more determined by the advancement of value added that it offers. Companies move toward services and innovations in the business model (Nenenen & Storbacka, 2010) and introduce industry 4.0 (Bundesministerium fur Bildung und Forschung, 2016). A symptom of these novelty is a concept of servicification of manufacturing (Neely et al. 2011) and cross-sectoral connections, which have reconstructed traditional global value chains (Naude et al. 2019) and, together with Industry 4.0, is expected to change the landscape of global manufacturing. As a result of facilitation of manufacturing, economies placed in the downstream market can improve their role in global value chains. In Europe, this can be an opportunity for most Central and Eastern European countries. Analyzing changes in CEE’s role in technological global value chains, we should take into account its two most important value-added suppliers: China and Germany, as well as their most important value-added buyer - Germany. These three economies established a sort of value added flows triangle. The regional supply chains built by Germany in the CEE allowed it to maintain a comparative advantage in sectors important for the economy, while helping the CEE countries join global value chains, positively influencing economic growth, but also reducing them to entities operating in less advanced stages of production (Jacoby, 2010; Fortwengel, 2011). Today, Germany also cooperates strongly with China (as a result of Digital Silk Road), and the CEE economies (especially the Visegrad Group) are increasingly dependent on Chinese value added, still linked to German value added. The most visible connections can be found in automotive and electronics. Hence, the question is: how strong are these links in servicification of manufacturing and whether there are visible trends in value-added flows in between this triangle in the era of industry 4.0 and Chinese Digital Silk Road. The research question seems to be relevant, thus in the subject literature, little is known about the mentioned relations (Roland Berger, 2021). The research method based on the analysis of data from the OECD Trade in Value Added databases, containing the world input-output tables for the period 2005–2018. The system of balance equations in the input-output model for one economy has been adopted to a multi-economy model. The model is described in more detail in (Koopman et al. 2013 or Hummels et al, 2001) and is based on the decomposition of gross exports. The method includes not only estimates of total value added in global value chains, but also calculations at both the mezoeconomic level and cross-sectoral flows of value added (including servicification of manufacturing). The results of analysis showed that most relations between economies continued to deepen the imbalance in flows of value added. The CEE economies are making their manufacturing increasingly dependent on advanced services (both from Germany and China). On the other hand, the share of CEE services to Chinese and German manufacturing is decreasing or remains steady. However, some trends could be observed in the last years, especially between Germany and China. German manufacturing is starting to rely more on Chinese value added (information and communication technologies services and the subgroup computer programming, consultancy and information services activities in manufacturing, information and communication technologies services' value added in transport equipment), although previously Germany provided more of these services to China. In telecommunications in manufacturing between CEE and Germany, the trend has turned against CEE. However, there was no direct compensation between pairs of economies, but the decrease in German value-added flows to China resulted in a much larger increase in value-added from China in German manufacturing. If the presented changes in flows were to reflect the effectiveness of Chinese industry 4.0 and Digital Silk Road. These strategies serve their purposes and increases not only the advancement of Chinese value-added exports, but also makes important economies dependent on this added value. On the contrary, the industry 4.0 strategy in CEE has not improved its position in the triad. Germany has still a strong position as a provider of value added, but its dependence on foreign value added is high, which derives from the links with CEE.