Offshore Middlemen: Transnational Intermediation in Technology Sourcing

Abstract

The tendency of acquiring information systems and other high technology services from international suppliers continues at unprecedented levels. The primary motivation for the offshore sourcing of technology and services continues to be labor cost arbitrage, and secondly, access to higher levels of expertise. Yet paradoxically, large gaps in technical proficiency, cultural values, and communication styles between client and vendor can undermine the overall success of the offshore relationship. This paper argues that a new breed of entities have emerged, brokering or intermediating offshore relations. The capabilities of such 'middlemen' include moderating disparities in expertise, culture, and communication styles that often deteriorate performance in offshore relationships. The paper presents a preliminary theoretical justification for the emergence of offshore intermediaries, describes how and why they develop boundary spanning capabilities, and offers a case study as initial evidence substantiating the function and processes in intermediating transnational offshoring relationships. Our theory development concludes with propositions concerning four major offshore intermediary capabilities: (i) intermediating cultural distance, (ii) intermediating cognitive distance, (iii) pre-contractual preparation and negotiation, and (iv) post-contractual operational management.

Information systems offshore outsourcing: managerial conclusions from academic research

“…Although the articles based on the client's perspective prevail over those which focus on the provider, an increasing number of studies are now using both perspectives at the same time or focusing exclusively on the provider's perspective. This new stance is in keeping with the conclusions drawn from previous papers (Mahnke, Wareham and Bjorn-Andersen 2008). The studies analyzed do not adopt an economic theory for their justification very often but, when they do use one, the Transaction Costs Theory, the Knowledge Management Theory and the Agency Theory appear as the most popular theoretical frameworks.…”

“…( As for Vendor-client relationship, it is the main concern in several papers that reflect the difficulties associated both with coordination and with the differences in terms of status between work teams belonging to various countries and cultures (Metiu 2006;Mirani 2007). These difficulties are so serious that some firms have to hire an intermediary who acts as a bridge -offshore middlemanbetween onshore and offshore organizations (Mahnke, Wareham and Bjorn-Andersen 2008), helping to soften cultural and cognitive differences during the preparation and pre-contractual negotiation and even in the post-contractual stage. Project Management topic is covered by twelve articles.…”

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

“…The extra costs come from increased efforts in knowledge formulation and coordination (Kanawattanachai & Yoo, 2007) and increased boundary spanning (Levina & Vaast, 2008;Mahnke, Wareham, & Bjorn-Andersen, 2008), the need for more controls (Choudhury & Sabherwal, 2003), and difficulties in managing dispersed teams (O'Leary & Cummings, 2007;Oshri, Kotlarsky, & Willcocks, 2007). Liberty Source, as a domestic provider for AOL, had lower transaction costs than the Indian-based provider.…”

Information Systems Offshore Outsourcing: An Exploratory Study of Motivations and Risks in Large Spanish Firms

“…This means that outsourcing no longer constitutes a tactical solution of a technical nature but a strategic solution that creates and defends the firm's competitive advantage (Erber and Sayed-Ahmed, 2005;Pai and Basu, 2007). We should take into account access to high levels of expertise (Mahnke, Wareham and Bjorn-Andersen, 2008) and the positive impact on IS service quality.…”