Shaji Khan

A review of the IT outsourcing literature: Insights for practice

This paper reviews research studies of information technology outsourcing (ITO) practice and provides substantial evidence that researchers have meaningfully and significantly addressed the call for academics to produce knowledge relevant to practitioners. Based on a review of 191 IT outsourcing articles, we extract the insights for practice on six key ITO topics relevant to practitioners. The first three topics relate to the early 1990s focus on determinants of IT outsourcing, IT outsourcing strategy, and mitigating IT outsourcing risks. A focus on best practices and client and supplier capabilities developed from the mid-1990s and is traced through to the late 2000s, while relationship management is shown to be a perennial and challenging issue throughout the nearly 20years under study. More recently studies have developed around offshore outsourcing, business process outsourcing and the rise, decline and resurrection of application service provision. The paper concludes by pointing to future challenges and developments.

A review of the IT outsourcing empirical literature and future research directions

An enormous amount of information has been produced about the IT outsourcing phenomenon over the last 20 years, but one has to look to the academic literature for consistent, objective, and reliable research approaches and analyses. Our review finds that, in practice, the academic literature on IT outsourcing has very much honored both rigor and relevance in the ways in which research has been conducted. Our central purpose in the review was to answer two research questions: What has the empirical academic literature found about information technology outsourcing (ITO) decisions and outcomes? What are the gaps in knowledge to consider in future ITO research? To answer these questions, we examined 164 empirical ITO articles published between 1992 and 2010 in 50 journals. Adapting a method used by Jeyaraj et al. (2006), we encapsulated this vast empirical literature on ITO in a way that was concise, meaningful, and helpful to researchers. We coded 36 dependent variables, 138 independent variables, and 741 relationships between independent and dependent variables. By extracting the best evidence, we developed two models of outsourcing: one model addressed ITO decisions and one model addressed ITO outcomes. The model of ITO decisions includes independent variables associated with motives to outsource, transaction attributes, client firm characteristics, and influence sources. The model of ITO outcomes includes independent variables associated with client and supplier capabilities, relationship characteristics, contractual governance, decision characteristics, and transaction attributes. We also examined the interactions among broad categories of variables and the learning curve effects resulting from feedback loops. Overall, ITO researchers have a broad and deep understanding of ITO. However, the field continues to evolve as clients and suppliers on every inhabited continent participate actively in the global sourcing community. There is still much research yet to be done. We reviewed recent studies that have identified gaps in current knowledge and proposed future paths of research pertaining to strategic motivations, environmental influences, dynamic interactions, configurational and portfolio approaches, global destinations, emerging models, reference theory extension, and grounded theory development.

Beyond Transaction Cost Economics

Highlights? We coded 73 empirical findings from 31 journal articles that applied Transaction Cost Economics (TCE) to study Information Technology Outsourcing (ITO). ? We found that only 49% of the empirical ITO findings supported TCE logic. ? We argue that ITO research has matured to the point that we should be building our own endogenous ITO theory. ? We offer three assumptions about ITO and provide, in each case, reasons why these may be more appropriate than TCE assumptions. ? We draw on a review of 741 ITO empirical findings to identify the most promising constructs to use in an endogenous ITO theory and propose some sample propositions. In our review, we coded 73 empirical findings from 31 journal articles that applied Transaction Cost Economics (TCE) to study Information Technology Outsourcing (ITO). As Karimi-Alaghehband et al. (2011) note correctly, the empirical results of TCE tests in the context of ITO are mixed. We found that only 49% of the empirical ITO findings supported TCE logic. We found only slightly better support for TCE when it is used as a normative theory (54%) than when it is used as a predictive theory (47%). The main difference between Karimi-Alaghehband et al.s (2011) contribution and our contribution to the debate focuses upon what to do next. Karimi-Alaghehband et al. (2011) argue that ITO researchers need to apply TCE more faithfully. We argue that we are asking too much of TCE-the ITO phenomenon is more complex than can be accommodated by TCE. We argue that ITO research has matured to the point that we should be building our own endogenous ITO theory. We offer observations and insights on what such a theory might entail. In moving ITO research forward, we first critique TCE assumptions and provide alternative assumptions that seem to fit ITO observations well. We draw on our review of 741 ITO empirical findings (Lacity et al., 2010) to provide a detailed theoretical framework to advance further study that suggests the most promising constructs to use in an endogenous ITO theory.

Review of the empirical business services sourcing literature: an update and future directions

The 2010 Journal of Information Technology (JIT) article, ‘A Review of the IT Outsourcing Empirical Literature and Future Research Directions,’ analyzed 741 findings on the determinants of Information Technology Outsourcing (ITO) decisions and outcomes from 164 empirical articles published between 1992 and 2010. Using the same coding method, the 2011 JIT article, ‘Business Process Outsourcing Studies: A Critical Review and Research Directions,’ analyzed 615 findings on the determinants of Business Process Outsourcing (BPO) decisions and outcomes from 67 empirical articles published between 1996 and 2011. Taken together, these two reviews found that the preponderance of evidence from both ITO and BPO research streams produced largely consistent results pertaining to the categories of independent variables that affected outsourcing decisions and outcomes. To investigate the most current research findings on business services, which comprise ITO and BPO, and to compare the results with the prior JIT reviews, we replicated the method used in the prior JIT reviews. In this update, we examined 174 newly published articles across 78 academic journals published between 2010 and 2014. We found that researchers have significantly expanded the variables of interest in the last 4 years. In all, researchers investigated 69 new variables. Compared with earlier research, this review of recent articles found a deeper exploration of the direct effects of transaction attributes, sourcing motivations, client and provider capabilities, and governance on sourcing decisions and outcomes. Researchers have also studied a broader variety of sourcing decisions, including shared services, captive centers, rural sourcing and backsourcing. This update also found a more nuanced understanding of relational governance and its interaction with contractual governance. We assessed the research progress that has been made on ten previously identified gaps in knowledge. We proposed a future research agenda that includes continued, incremental progress on ‘normal science’ research questions, as well as more ambitious research goals. We challenged researchers to investigate how sourcing clients, providers, and advisors can protect jobs, protect the environment, and ensure security in an increasingly automated world.

Field of dreams: building IT capabilities in rural America

Purpose – The purpose of this paper is to provide industry insights on the business models, practices, and capabilities that suppliers need to deliver cost‐effective information technology (IT) outsourcing services from rural locations within the USA. As rural outsourcing has not yet been studied by academics, many questions have not yet been answered. How can suppliers attract enough talent to rural areas to make rural outsourcing viable? How can suppliers scale operations? Will the value proposition attract serious clients? An ongoing research project was launched to answer these and other questions about rural outsourcing. This paper aims to report on the first set of findings based on four case studies.Design/methodology/approach – This paper reports on the results from four case studies of rural outsourcing suppliers. In total, 35 semi‐structured interviews were conducted with founders, executives, delivery center managers, and delivery team members and a visit was made to a rural delivery center own...

Transaction Cost Economics on trial again

We welcome the opportunity to comment on ‘‘The Role of Transaction Cost Economics in Information Technology Outsourcing Research: A Meta-analysis of the Choice of Contract Type”. We think Schermann et al. (2016) offers the IS community an opportunity to debate not only Transaction Cost Economics (TCE) in the context of Information Technology Outsourcing (ITO), but also provides an opportunity to debate the larger issue of fair theoretical appropriations. We structure our commentary as follows. First, we briefly comment on the value of the empirical findings in Schermann et al. (2016). Second, we raise the question, ‘‘What is a fair theoretical appropriation?” We present three arguments relevant to fair theoretical appropriations and assess Schermann et al. (2016) relative to the arguments. Overall, our aim is not to ‘‘win” the debate or to comment on one isolated review article, but to invoke a thoughtful conversation within the IS community.

The Impact of Environmental, Firm, and Relational Factors on Entrepreneurs' Ethically Suspect Behaviors

Entrepreneurs’ engagement in ethically suspect behaviors (ESBs) can have seriously negative business and social consequences. Yet what defines entrepreneurs’ ESBs remains unclear. Further, little is known about what factors contribute to such behaviors. This study provides conceptual clarification of entrepreneurs’ ESBs and examines environmental, firm, and individual factors in relation to them. Results, based on data from 158 Chinese entrepreneurs, indicate that dynamism, firm performance, and relational social capital are all negatively related to ESBs. Firm performance partially mediates the relationship between dynamism and ESBs, and albeit with marginal support, the relationship between entrepreneurs’ relational social capital and their ESBs.

Survey results: are client organizations responding to anti‐offshoring pressures?

Purpose – Given the global economic recession, anti‐offshoring political campaign platforms and proposed anti‐offshoring legislation in many developed countries, organizations face pressure to keep jobs in their home country. The purpose of this study is to determine the extent to which organizations are responding to anti‐offshoring pressures. It aims to ask whether client organizations are changing their buying patterns for information technology outsourcing (ITO) and business process outsourcing (BPO) services because of anti‐offshoring pressures.Design/methodology/approach – A survey was administered to respondents representing 84 client organizations that purchase ITO and BPO services. Nine countries are represented, but the data primarily capture US client responses.Findings – Overall, it was found that client organizations are not changing their buying patterns because of anti‐offshoring pressures. Client respondents report strong satisfaction with offshore outsourcing of IT and business services. ...

Employing U.S. Military Families to Provide Business Process Outsourcing Services: A Case study of Impact Sourcing and Reshoring

This paper describes how a startup business process outsourcing (BPO) provider named Liberty Source helped a large U.S.-based client reshore business services from an established Indian BPO provider. Founded in 2014, Liberty Source is a for-profit firm that provides a competitive alternative to offshoring while fulfilling its social mission to launch and sustain the careers of U.S. military spouses and veterans who face various employment disadvantages. Thus, the case describes reshoring in the context of impact sourcing. It addresses key impact sourcing issues pertaining to workforce development, scalability, and impact on employees. The impact was positive: the workers found the employment and stable salary were beneficial, “the military” culture fit well with the workers, and workers received considerable flexibility and greater career options. Liberty Source was able to reduce a client’s costs after reshoring the client’s processes because Liberty Source’s U.S. site had about 20 percent fewer full time equivalents (FTEs) FTEs than the original India location and because Liberty Source received subsidies. We found evidence that the offshore BPO provider and Liberty source experienced difficulties with finding enough skilled staff for the wages offered and both firms experienced attrition problems, although attrition was greater in India.

Organizational Responsiveness to Anti-offshoring Institutional Pressures

Abstract We explore the extent of organizational responsiveness to pressures from institutional constituents against offshoring of information technology and business process services. Drawing on a theoretical framework that integrates institutional and strategic explanations, we proposed that organizational responsiveness to anti-offshoring institutional pressures is a function of both the characteristics of such pressures as well as organizations’ prior success with offshoring. Results based on survey data from 84 offshoring client organizations indicate the following: Both greater organizational expectations of enhanced social legitimacy and mimetic influences from other organizations led to greater organizational responsiveness. Both conflict of institutional expectations with organizational goals and greater regulatory environment uncertainty reduced responsiveness. Organizational dependence on a key pressuring constituent had no effect. Surprisingly, organizational success with offshoring had no direct effect on responsiveness and we examine why this might be so. However, it attenuated the otherwise strong positive effect of social legitimacy and exacerbated the negative effect of regulatory environment uncertainty.