Information systems offshore outsourcing

Abstract

The authors would like to thank the editor and the anonymous reviewers for their suggestions. 1 INFORMATION SYSTEMS OFFSHORE OUTSOURCING: A DESCRIPTIVE ANALYSIS ABSTRACTPurpose The present paper has as its aim to deepen in the study of Information Systems Offshore Outsourcing, proposing three essential steps to make this decision: weighing up the advantages and risks of Offshore Outsourcing; analysing the taxonomy of this phenomenon; and determining its current geography.Design/Methodology/Approach With that objective in mind, it was decided to base the research work on the literature about this topic and the review of reports and statistics coming from different sources (consultants, the press, public institutions, etc.).Findings Offshore Outsourcing has grown vertiginously in recent years. Its advantages exceed even those of onshore outsourcing, though it also involves greater risks derived from the (cultural and physical) distance existing between customer and provider. Various types of services and customer-provider relationships hide under the umbrella of Offshore Outsourcing; i.e. it is not a homogeneous phenomenon. The main Offshore Outsourcing customers can be found in the USA and Europe, mainly in the UK but also in other countries such as Germany and France. As for provider firms, most of them are located in Asia −outstandingly in India but also in China and Russia. At present, there are important providers scattered in other continents as well. Originality/ValueThe conclusions suggest that the range of potential Offshore Outsourcing destinations must be widened and that the search for a provider cannot be based exclusively on cost savings; other considerations such as quality, security and proximity of the provider must also be taken into consideration. That is precisely the reason why the study of new countries like Spain as Offshore Outsourcing destinations is proposed.

Sourcing from China: A Literature Review of Motivations, Outcomes, Problems, and Solutions

“…Besides cost savings, flexibility was the second most important motivation for sourcing from China. Flexibility is more specifically defined as "reducing the total development time" of new products (Gonzalez et al, 2006(Gonzalez et al, , p. 1236; achieving quick responses to changes (Li et al, 2007); and the ability "to match the unpredictability of demand" (Towers & Song, 2010, p. 541). Moreover, high component availability of specialized or rare products is identified as a reason for sourcing from China.…”

“…Skills mainly refer to a broad skill base of Chinese suppliers regarding industries and manufacturing processes. An improvement in technology leads to knowledgeable suppliers in China, which might be even more specialized than Western countries in certain fields (Gonzalez et al, 2006;Jia et al, 2014;Stringer et al, 2011). Referring back to an offshore strategy, the lead-time to the domestic Chinese market can be decreased significantly, which presents another important motivation (Jia et al, 2014;Zhang et al, 2013).…”

“…Only a few authors state that profitability can be enhanced, even though it represents a major motivation when sourcing from China (Kang et al, 2012;Lin & Ma, 2012;Ni et al, 2009). Moreover, results show that competitive advantage can be generated (Li et al, 2008;Marion et al, 2007), and thereby entering new markets is facilitated (Gonzalez et al, 2006;Jia et al, 2014).…”

“…Almost equally striking as problems resulting from cultural differences are those resulting from deficiencies in quality. According to Gonzalez et al (2006), lacking quality is often a result of poor training, insufficient managerial knowledge, as well as communication issues. In addition, the end customer often identifies deficient quality, which leads to costly consequences requiring replacement, and compensation for damages (Sethi et al, 2011).…”

“…According to Allon and van Mieghem (2010), lead-time can be an issue due to the geographical distance to China, which implies a decline in flexibility (Woxenius, 2006). Even though costs are the main motivation for sourcing from China, "it is risky to consider exclusively the cost savings … as many hidden or unforeseen costs may arise that reduce the quality of the service received" (Gonzalez et al, 2006(Gonzalez et al, , p. 1244.…”