Proposing a Formalised Model for Mindful Information Systems Offshoring

Abstract

Abstract. The central thesis of this paper is that Mathematical Economics can provide a novel approach to the examination of offshoring business decisions and provide an impetus for future research in the area. A growing body of research indicates that projected cost savings from IT offshoring projects are not being met. Furthermore, evidence suggests that decision-making processes have been more emotional than rational, and that many offshoring arrangements have been rushed into without adequate analysis of the true costs involved. Building on the concept of mindfulness and mindlessness introduced to the IS literature by Swanson and Ramiller, a cost equation is developed using "deductive reasoning rather than inductive study" in the tradition of mathematical economics. The model endeavours to capture a wide range of both the quantitative and qualitative parameters. Although the economic model is illustrated against the background of a European scenario, the theoretical framework is generic and applicable to organisations in any global location.