Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of illustrations
- Acknowledgements
- 1 Introduction
- 2 Global services outsourcing overview
- 3 Making the services outsourcing decision
- 4 Location and sourcing model choice in global services outsourcing
- 5 Managing global services outsourcing arrangements
- 6 Creating shared services arrangements
- 7 Services outsourcing and performance management
- 8 Services outsourcing and the spin-off arrangement
- 9 Learning from failure and strategies for recovery in business process outsourcing
- 10 Conclusion
- Glossary
- Index
- References
5 - Managing global services outsourcing arrangements
Published online by Cambridge University Press: 05 June 2012
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of illustrations
- Acknowledgements
- 1 Introduction
- 2 Global services outsourcing overview
- 3 Making the services outsourcing decision
- 4 Location and sourcing model choice in global services outsourcing
- 5 Managing global services outsourcing arrangements
- 6 Creating shared services arrangements
- 7 Services outsourcing and performance management
- 8 Services outsourcing and the spin-off arrangement
- 9 Learning from failure and strategies for recovery in business process outsourcing
- 10 Conclusion
- Glossary
- Index
- References
Summary
Introduction
Organisations are often drawn to global services outsourcing to avail of the potential labour cost savings. However, organisations fail to take account of the transaction costs involved in managing global services arrangements. Transaction costs are difficult to measure objectively, and are much higher than those associated with domestic outsourcing as a result of differences in culture, language and time zone and of geographic distance. Cultural differences can lead to communication difficulties between client and vendor personnel, which can adversely impact service quality levels. In addition, where the vendor is in a different time zone, the client will have to employ project managers in different shift patterns to manage the vendor, which is an additional cost over domestic outsourcing. These transaction costs can offset any gains from savings on labour costs, and also lead to service quality problems.
An area where the global services outsourcing phenomenon has had a significant impact has been that of software development. Many software development projects now involve teams of people from the client and vendor working together, speaking a variety of languages, and separated by time and geographic distance. Although global software development can deliver reduced development times as a result of ‘follow-the-sun’ working, and of access to a highly skilled and lower cost labour pool, it presents significant challenges. The lack of face-to-face interaction between client and vendor personnel separated by geographic distance can lead to breakdowns in communication and misunderstandings in client requirements.
- Type
- Chapter
- Information
- Global Services Outsourcing , pp. 114 - 148Publisher: Cambridge University PressPrint publication year: 2010
References
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(2006). Building Your Information Systems from the Other Side of the World: How InfoSys Manages Time Zone Differences, MIS Quarterly Executive, 5(1), 43–53.Google Scholar
, and (2007). Global Software Development: Exploring Socialisation and Face-to-Face Meetings in Distributed Strategic Projects, Journal of Strategic Information Systems, 16, 25–49.CrossRefGoogle Scholar
, and (2008). Cocreating Understanding and Value in Distributed Work: How Members of Onsite and Offshore Vendor Teams Give, Make, Demand, and Break Sense, MIS Quarterly, 32(2), 531–51.CrossRefGoogle Scholar
(2007). Managing Risk in Offshore Systems Development. Communications of the ACM, 50(4), 69–75.CrossRefGoogle Scholar
, and (2003). Global IT Outsourcing: Software Development Across Borders, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
, and (2006). Real Options in Information Technology Risk Management: An Empirical Validation of Risk–Option Relationships, MIS Quarterly, 30(4), 827–64CrossRefGoogle Scholar
, and (2008). Business Familiarity as Risk Mitigation in Software Development Outsourcing, MIS Quarterly, 32(3), 531–51.CrossRefGoogle Scholar
, , and (2003). Contracts in Offshore Software Development: An Empirical Analysis, Management Science, 49(12), 1671–83.CrossRefGoogle Scholar
and (2006). Proven Practices for Effectively Offshoring IT Work, Sloan Management Review, 47(3), 56–63Google Scholar
and (2007). Critical Capabilities for Offshore Outsourcing of Information Systems, MIS Quarterly Executive, 6(3), 147–61.Google Scholar
and (2004). Proven Practices for IT Offshore Outsourcing, Cutter Consortium Executive Report, 5(12), 1–27.Google Scholar
and (2004). Evolution of Offshore Software Development: From Outsourcing to Co-sourcing, MIS Quarterly Executive, 3(2), 69–81.Google Scholar
(2005). The Coming Commoditization of Processes, Harvard Business Review, 83(6), 101–8Google Scholar
, , and (2005). Enabling Process Discipline: Lessons from the Journey to CMM Level 5, MIS Quarterly Executive, 4(1), 215–27.Google Scholar
, , and (2004). Managing the Life Cycle of Virtual Teams, Academy of Management Executive, 18(2), 6–20Google Scholar
and (2000). Bridging Space over Time: Global Virtual Team Dynamics and Effectiveness, Organisation Science, 11(5), 473–92.CrossRefGoogle Scholar
(2005). Virtual Workgroups in Offshore Systems Development, Information and Software Technology, 47, 305–18.CrossRefGoogle Scholar
and (2007). Why ‘Nearshore’ Means that Distance Matters, Communications of the ACM, 50(10), 40–6.CrossRefGoogle Scholar
, and (2001). Desktop Video Conferencing in Virtual Workgroups: Anticipation, System Evaluation, and Performance, Information Systems Journal, 11(3), 213–27.CrossRefGoogle Scholar
and (2001). Global Software Development, IEEE Transactions on Software Engineering, 18(2), 16–20.CrossRefGoogle Scholar
, and (2006). Managing Multicultural Teams, Harvard Business Review, November, 84–91.Google ScholarPubMed
, and (2004). Managing Cross-Cultural Issues in Global Software Outsourcing, Communications of the ACM, 47(4), 62–6CrossRefGoogle Scholar
and (2001). Some Political and Cultural Issues in the Globalisation of Software Development: Case Experience from Britain and India, Information and Organisation, 11, 25–43.CrossRefGoogle Scholar
(2006). Building Your Information Systems from the Other Side of the World: How InfoSys Manages Time Zone Differences, MIS Quarterly Executive, 5(1), 43–53.Google Scholar