Outsourcing has grown more so than any other sector of IT services. According to a research by the analytic company Gartner soon four of ten jobs in the IT sector will be outsourced. For a nation like Sweden that means about 40,000 jobs going abroad. Business managers look to outsourcing as a means of reducing their operating cost and their need for capital spending. Companies turn to outsourcing to save money and seek expertise outside. As the competition is tough these days especially for small-to-medium sized enterprises, paying someone else to do work inexpensively is one way to get around. Small-to-medium sized enterprises (SMEs) have become a sector buried in all the media "hype". This essay is written in an effort to help SMEs uncover the relevant strategic offshoring issues. Many managers fail to figure out India after their first visit, other get confused by the culture differences. The purpose of this essay is to map out the different ways to outsource to India and to assist managers with all necessary information that is needed. Which ownership models there are and how to choose the one that fits you. How the different ways and methods lack and what is their limitation. Not to mention how to avoid hindrance during the process. The essay will also map the Indian outsourcing industry, the major industry players and the major outsourcing locations. / Outsourcing är ett av de störst växande områdena i dagens IT-industri. Enligt analysföretaget Gartner kommer så småningom vart fjärde IT-jobb i den industrialiserade delen av världen att ha flyttat till låglöneländer som Indien. I siffror handlar det om 40 000 jobb bara i Sverige. IT-företagen söker efter billigare, snabbare, flexiblare och modernare lösningar. Samtidigt som man förväntar sig att kvalitén är bibehållen. IT-sektorn för små och medelstora företag är konkurrens kraftigare än någonsin. Att använda sig av utomstående expertis i form av offshore outsourcing är ett gensvar. De större företagen är dem som nämns i tidningar när det pratas om outsourcing, små och medelstora företag har hamnat i skymundan i samband med outsourcing av IT-verksamhet. Denna uppsats är skriven för att belysa de mindre företagen om de unika möjligheter offshore outsourcing till Indien erbjuder. Många företagsledare misslyckas att komma underfund med Indien efter första besöket, andra blir förvirrade i form av kulturkrockar. Syftet med denna kandidat uppsats är att kartlägga de olika sätten att outsourca till Indien och bistå företagsledare med information om hur processer inom fenomenet outsourcing går till. Vilka ägarskapsmodeller det finns att välja ibland samt visa vilka eventuella brister och/eller begränsningar metoderna har. Samt hur man hanterar risker. Uppsatsen kommer även att ge en inblick på den Indiska outsourcing industrin, de stora nyckel företagen och perspektiv utifrån geografiskt läge.

The purpose of this research was to examine the Swedish SMEs outsourcing behavior and the Chinese outsourcing vendors’ service offering to compose a comparable checklist. The comparable checklist is used to match the needs from the Swedish side with the offerings from the Chinese side. Due to the recent increase of adopting the concept of Business Process Outsourcing (BPO), a focus towards this concept was chosen. With this, a comparable checklist was composed that can be used by Swedish SMEs to secure their offshore investment in China.The research was conducted through a mixed method methodology, with a self-administered questionnaire conducted towards Swedish enterprises and semi-structured interviews with Chinese outsourcing vendors. The Swedish enterprises were mainly small enterprises, involved in the service industry. The Chinese outsourcing vendors were mainly involved with BPO and related IT-solutions. The gathered empirical data was analyzed using a comparative design, this to validate the theoretical findings.The research resulted in findings about the Swedish SMEs outsourcing behavior; to what extent they are interested in outsourcing a business process and what their perspective is on the BPO concept. It also resulted in receiving the Chinese outsourcing vendors’ perspective on how they target the Western market in order to achieve a successful outsourcing relationship which in turn resulted in the final composed comparable checklist.

The small business sector has been identified as a target by government to reduce South Africa’s unemployment problem. There is existing research that most companies, including small business, avoid taking on new employees to avoid, perceived, stringent labour legislation. This research investigates whether small businesses adopt alternative employment strategies to labour as a means to avoiding labour legislation. The questionnaire was distributed to over 9000 small businesses in the metal and engineering manufacturing sectors. Of the 214 responses only 194 could be used. The results of the research point to a prevailing perception by those surveyed that labour legislation is stringent in South Africa and that small businesses, in their efforts to avoid compliance, chose to employ in the temporary and labour broker employment market. Mechanisation is also an option used by small business to avoid legislation. Legislation is, however, not always the only driver when businesses decide to mechanise. / Dissertation (MBA)--University of Pretoria, 2014. / pagibs2015 / Gordon Institute of Business Science (GIBS) / Unrestricted

The main motivations of this thesis are to bring new insights into the different forms of international assignment in a non-multinational context. For this purpose, the dissertation provides new evidence on the roles of different forms of international assignees in offshore insourcing and outsourcing arrangements. The thesis is based on four research essays. The first chapter develops a conceptual framework that links the extent of international assignments to the characteristics of service offshoring strategies in terms of drivers, task complexity, governance mode, and host country location. We argue that offshoring strategies are associated with different needs for control, coordination and transfer of tacit knowledge. Those needs are in turn best served by using a different combination of international assignments. The model suggests that opting for extensive international transfers when the offshoring strategy does not require doing so, exposes firms to unnecessary extra costs. On the contrary, limiting the use of international transfers below the level required to guarantee cross-border control, coordination and knowledge transfer increases the risk of not being able to integrate the offshored services. Therefore, the adequate use of various forms of international assignments (such as expatriation, inpatriation and virtual assignments) constitutes an important capability for the offshoring organization to be able to integrate globally dispersed value chain activities whilst at the same time containing costs. The aim of Chapter 2 is to develop a comprehensive integrative framework that provides a deeper understanding of the use of expatriates and inpatriates to exert control in the specific context of offshore outsourcing. This study extends the agency theory by investigating different practices used by expatriates and inpatriates to exert control on third party providers in order to reduce the agency problems of the client-provider relationships. The research approach consists of an exploratory qualitative study of 32 offshore outsourcing initiatives from 32 companies located in Belgium. The model suggests that even though expatriates and inpatriates play a vital role in exerting control through different strategic control practices implemented in the client company or the third-party provider, they may differ in various matters. Companies prefer to use inpatriates than expatriates as the latter is difficult to find, costly, have an attitude of dominance, and have difficulties in adjusting to the new environment. The specific advantage of using inpatriates is that they provide unique understanding and insight into ‘why things are happening’, which is difficult for expatriates to decipher. This emphasises that the process of inpatriating offshore members into the client company appears to hold significant potential in exerting control in offshore outsourcing relations. Control is a role that has traditionally been attributed to expatriates. Our research shows that inpatriates offer valid alternative with several advantages in the context of offshoring.Chapter 3 develops a comprehensive framework of potential factors responsible for hindering the learning process of offshore team members that should be considered in an offshore insourcing context. This paper adopts a longitudinal case study approach for over a period of one year for studying a large firm in the financial services sector based in Belgium and offshoring its service in Poland. The study focuses on a firm that has set up its own service operations abroad using an offshore insourcing arrangement. Based on a longitudinal study, this research recognizes delayed barriers that still hinder the learning process of offshore team members. Unexpectedly, the study demonstrates that the role of expatriates and inpatriates is an influencing factor (positive or negative) in the learning process of offshore team members. In addition, the results highlighted the fact that short-term perspectives for companies to fully benefit from their actions may not be the solution to enable offshore team members to learn their tasks efficiently in the long-run. Even though offshoring provides access to lower costs and specialised resources, the primary challenge faced by companies is to be able to manage its knowledge efficiently across locations and facilitate the access of knowledge to its offshore team members. The purpose of chapter 4 is to explore how a large firm in the financial service sector transfers different types of knowledge, particularly through different forms of international assignees in an offshore insourcing arrangement. This study adopted a single in-depth case study of a firm based in Belgium where his offshore location is in Poland. The findings from 31 interviews concluded that different forms of international assignees are used in the form of complementary sequences to transfer various types of knowledge during the offshore insourcing arrangement. Therefore, all international assignments are not the same and should not be generalised into one category. Further, the findings offer qualitative evidence to support the roles of different forms of international assignees for creating and retaining new knowledge and avoiding knowledge loss for the organisation. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

Outsourcing is a trend that has penetrated many industries over the last years taking the form of offshore outsourcing in many cases. However the location decision that follows the offshore outsourcing or the offshoring decision is quite complex and almost impossible to be answered through a linear model. A series of frameworks have been developed attempting to facilitate the process above.The focus of this work is the analysis of the location decision making through the reflection of the existing literature and the example of a specific country, Greece. Greece is chosen as a dynamic environment where the recent economic crisis has provoked structural reforms at the country, affecting the attractiveness of the location. The analysis of country is based on an OECD recent survey while the comparison is made with the assistance of a specific location decision model.Based on the findings of this study, it can be claimed that the case of Greece is quite different compared to other countries at the past which have faced similar situations. Further the reforms that take place need more time in order to be projected and trigger the attractiveness of the location.

Thesis (MPhil (Information Science))--University of Stellenbosch, 2010. / ENGLISH ABSTRACT: In an effort to streamline operations and focus on what they regard as core activities, a growing number of organizations from both developed and developing countries are increasingly looking to outsource their software development and maintenance activities to lower cost countries such as India and China, this is evidenced by the phenomenal growth in India’s software industry and the number of major overseas IT companies establishing subsidiaries and relocating their Research and Development operations to India’s high-tech cities such as Hyderabad, Chennai and Pune. With the mere size of their populations standing at over a billion people each, supported by their governments, Indian and Chinese business have been able to leverage this population advantage producing a large pool of software engineers, technical specialists and back office workers to cater for the talent demands of the world. While the actual software development process might be non-core to many organizations, it however yields software applications that drive critical business processes and embed valuable organizational knowledge. The handing over of software development operations by an organization to a third party poses a risk of creating a dependency and exposing vital business knowledge to competition thereby compromising its competitive edge. Both the people that participate in software development projects and the software products these people develop possess knowledge which need to be secured and leveraged to enable the continued success of an organization. Securing these knowledge artefacts and the knowledge created by the software development lifecycle process cannot be left to chance, therefore the success of an organization’s software development activities needs to be measured largely on its ability to secure knowledge assets that derive from such process and the leveraging of such knowledge to drive organizational strategy and yield new knowledge. This thesis is premised on the fact that knowledge is the one competitive advantage that separates successful nations from failed states and one dominant force that prevails across all successful economies in the 21st century, hence the notion of a knowledge economy. The study seeks to understand the importance of the role played by knowledge in an outsourced software development engagement and how knowledge management affects the success of this engagement. By exploring the business drivers that spur organizations to outsource their IT activities, the software development lifecycle, the different outsource models available to organizations and the inherent risks surrounding knowledge loss, the thesis seeks to gain an understanding and the criticality of managing knowledge within an outsourced software development context and the strategies that organizations can utilize to deliver on outsourcing promises with minimal risk. / AFRIKAANSE OPSOMMING: Ten einde hulle werksaamhede meer vaartbelyn te maak en om ingestel te bly op dit wat hulle as kernbedrywighede beskou, kyk al hoe meer organisasies in ontwikkelde en ontwikkelende lande na die moontlikheid om die ontwikkeling en instandhouding van hulle sagteware uit te kontrakteer na lande soos Indië en China, waar dit goedkoper gedoen kan word as tuis. Dié feit blyk duidelik uit die fenomenale groei in veral Indië se sagtewarenywerheid en die getal groot oorsese IT firmas wat hulle navorsing en ontwikkeling in hoë-tegnologie stede soos Hyderabad, Chennai en Puna laat doen. Met bevolkings van meer as ’n miljard elk, kon Chinese en Indiese ondernemings hierdie voorsprong benut om ‘n magdom sagteware-ingenieurs, tegniese spesialiste en kantoorwerkers te produseer om in die wêreld se vraag na kundigheid te voorsien. Terwyl die ontwikkeling van sagteware miskien nie deur baie ondernemings as ‘n kernbedrywigheid beskou word nie, lewer dit tog aanwendings op wat kritieke sakeaktiwiteite aandryf en waardevolle organisatoriese kennis vasvang. Die oordra van sagteware-ontwikkeling van een onderneming na ‘n derde party gaan egter gepaard met die risiko dat dit afhanklikheid kan skep en ook uiters belangrike sakekennis aan konkurrente toeganklik maak, wat die mededingende voorsprong wat sulke kennis bied bedreig. Die mense betrokke by die ontwikkeling van sagteware en die produkte wat hulle sodoende skep, is ‘n bron van kennis wat beveilig en verveelvuldig moet word om ‘n onderneming in staat te stel om suksesvol te bly voortbestaan. Die versekering van hierdie verworwe kennis en die kundigheid wat deur die ontwikkelingsiklus van die sagteware geskep word, kan nie aan die toeval oorgelaat word nie – die sukses van ‘n onderneming se sagteware-ontwikkeling moet veral gemeet word aan sy vermoë om die kennisbates wat uit die proses voortvloei te verseker, en om hierdie kennis te verveelvuldig om organisatoriese strategieë aan te dryf en nuwe kennis op te lewer. Hierdie tesis se uitgangspunt is dat kennis die mededingende voorsprong is wat suksesvolle nasies onderskei van die res; dit is dié faktor wat kenmerkend is van al die suksesvolle ekonomieë van die 20ste eeu, en die kern van die begrip van ‘n “kennis-ekonomie”. Hierdie ondersoek wil die belangrikheid verken van die rol wat gespeel word deur kennis in ‘n uitgekontrakteerde verbintenis vir die ontwikkeling van sagteware and hoe kennisbestuur die sukses van so ‘n verbintenis affekteer. Deur ondersoek in te stel na die motivering wat besighede aanspoor om hulle IT bedrywighede uit te plaas, na die sagteware-ontwikkeling lewenssiklus, die verskillende modelle van uitkontraktering wat vir organisasies beskikbaar is en die inherente risiko’s rondom kennisverlies, wil hierdie tesis ‘n begrip vorm van die kritieke noodsaaklikheid vir die bestuur van kennis in ‘n uitgekontrakteerde sagteware-ontwikkeling en van die strategieë wat organisasies kan aanwend om die voordele wat uitkontraktering beloof ten volle te benut teen minimale risiko.

In the realm of globalization, international sourcing of services contributes to reshape firm’s value chains as the physical dispersion of these activities increases. This reorganization does not simply lead to the replication of domestic activities in a destination providing resource advantages, but, in most cases, it implies profound modifications of the flows of activities, including the reconsideration of the boundaries of the firm. Global sourcing strategies, also called offshoring, seek to increase firm’s efficiency by combining the exploitation of foreign locational advantages with process redesign. When aggregated, these firm-level strategies translate into considerable international exchanges to a point that flows of intermediate services represent about 73% of the total of international trade in services for 2005 (OECD, 2009). These activities present a high degree of heterogeneity in terms of functions concerned, the related domestic industries, motivations, destinations, organizational structure or scope. This wave of internationalization, because of its relative novelty, growth and rapid diversification, draws the interest from the public, political and academic spheres but the comprehension of the determinants shaping the configuration and organization of these activities still remain largely unknown. Based on four essays, this PhD thesis addresses the impact of host-country characteristics and distance factors on the configuration of international sourcing activities in the dimensions of location, governance model and scope of activities.<p><p>The first paper studies the country-specific determinants of the interdependent choices of destination and governance model in the global sourcing of services. I explore the simultaneity of these decisions and I jointly estimate their determinants using implementation-level data. Derived from comparative advantages, host-country uncertainty and the global dispersion of tasks, I present three classes of factors driving global sourcing configurations: resource arbitrages, host-country risk and communication barriers. Empirical results confirm that locations with resource or capabilities advantages specific to services – low labour cost, education and labour supply – attract more offshoring activities. However the pursued resource advantages differ depending on the governance model. Country attractiveness for captive implementations presents a higher positive sensitivity to the education-intensive resources, while outsourcing strategies have a greater cost-cutting orientation coming from labour cost arbitrages. Furthermore, the risks inherent to the host-country, in the form of weak formal institutions and inexperience in the destination, have the dual effect of deterring location attractiveness, while they foster the adoption of the outsourcing model compared to the captive one. Communication barriers coming from geographic distance, cultural and linguistic differences have the simultaneous effect of discouraging global sourcing in those locations while, to overcome these constraints, firms favor higher integration with the use of captive models. <p><p>This second paper further explores the mechanisms through which home-host country distances affect the choice of governance mode in service offshoring. Using a Transaction Cost Economics approach, I explore the comparative costs of the hierarchical and contractual models to show that different dimensions of distance (geographic, cultural and institutional), because they generate different types of uncertainties, impact offshore governance choices in different ways. Empirical results confirm that, on the one hand, firms are more likely to respond to internal uncertainties resulting from geographic and cultural distance by leveraging the internal controls and collaboration mechanisms of a captive offshore service center. On the other hand, they tend to respond to external uncertainties resulting from institutional distance by limiting their foreign commitment and leveraging the resources and local experience of third party service providers. Finally, I find that the temporal distance component (time zone difference) of geographical dispersion between onshore and offshore countries plays a dominant role over the spatial distance component.<p><p>The third section then concentrates on the impact of the institutional environment (regulative) on international sourcing activities. To exploit country-specific advantages, firms that source activities from abroad are forced to integrate the institutional environment into the choice not only of host-country, but also of governance model for their offshore activities. Considering inefficient institutions as drivers of transaction costs, this conceptual paper explores the impact of the host-country regulative environment in the interdependent decisions of country selection and governance model (captive or outsourcing) in firms’ global sourcing strategies. I consider two classes of assets: transferred assets for knowledge/information flows, and local assets sourced from the host location. I show that each class involves specific institutional risks for offshoring practices. In turn, because of the different institutional exposures of the captive model and the outsourced one, the institutional risks associated with transferred and local assets have different implications for the choice of governance model. Firms react to institutional risks relative to transferred assets by internalizing their activity, but they bypass inefficient institutions for local assets using outsourcing. Based on the interaction of the institutional risks relative to each class of assets, I then obtain sufficient conditions that give the firm-optimal combinations of country selection and governance model.<p><p>The last section studies how firm-level and country-level risks affect the scope of the process operated in the foreign unit. To prevent appropriation hazard for proprietary content, firms choose a particular disaggregation of the value chain. We argue that, in response to the lack of control offered by internalization and the lack of protection provided by host-country institutions for protecting proprietary content, firms reduce the scope of their activities. In other words, they exploit existing complementarities between the tasks of their value chain using a higher disaggregation of their process and therefore reducing appropriation value for outsiders. Based on a sample of 750 international sourcing projects, regression results on the scope of offshore activities confirm that firms prefer to source discrete tasks rather than entire processes when they lack the protection of internalization and external institutions. In addition, experience modifies these relationships. On the one hand, inexperienced firms do not rely on this slicing mechanism to prevent the loss of control implied by an outsourcing model. On the other hand, the effect of weak institutional protection is perceived as more stringent for inexperienced firms. When host-country institutions are deficient, these firms, compared to the experienced ones, have a higher propensity to operate discrete tasks rather than entire processes.<p> / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

The Master Thesis deals with offshoring and its logistic requirements. The first part of thesis characterizes terms as outsourcing, offshoring and offshore outsourcing. The main reasons for foreign production are seeking of resources (typically low cost labour) and expansion into new markets. Benefits and risks of offshoring are analyzed in the thesis, as well as criteria for selection of suitable host destination. Often overlooked impacts of globalization on integrated supply chain are also considered in this thesis. Central and Eastern Europe is one of important offshoring regions. CEE offers relatively cheap and qualified labour. However, its main benefit is its small geographical distance from Western Europe. The costs of servicing markets at Western Europe from CEE are much lower compared to servicing these markets from Asia.

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.

This research investigates political risk in the context of service offshoring and the corresponding impact on risk management decisions. The first stage of the study uses the Repertory Grid Technique (RGT), to explore key post-contract political risks experiences within offshore outsourcing activities. Twelve key political risks affecting offshore outsourcing decisions are identified, and the moderating effect of offshoring activity types (BPO, ITO or KPO) on political risk exposure and impact perceptions is highlighted. The research also explores the conditioning effect of industry specific exposure to political risk and enhances the explanatory ability of the Transaction Cost Economics (TCE) constructs, offering a re-operationalization of the political risk component of external uncertainty. The second stage of the research introduces a series of hypotheses between offshoring flows and political risk profiles, and applies multiple regression to analyse political risk affecting offshore activities in low cost countries across contract-based offshoring engagements and FDI. The findings highlight that political risk is a genuine business concern for offshore contract-based outsourcing modalities, and identify concerns with Intellectual Property protection, Quality of Bureaucracy and Corruption as key considerations affecting location decisions in low-cost countries. The research further suggests a positive relationship between strong country level institutional and regulatory systems and high knowledge content in offshoring engagements. From a practical perspective, the research highlights the need for managerial tools to determine diversified firm and industry specific political risk impact on global service outsourcing engagements. The key practical contribution is the development of differentiated political risk typologies that can capture the nuances of external risks in offshoring, allowing for more accurate risk assessment of offshoring decisions.