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AN EXAMINATION OF CAPABILITY, QUALITY, PERFORMANCE AND
CRITICAL ISSUES OF OUTSOURCING VENDORS IN INDIA & CHINA
Shailendra C. Jain Palvia, Long Island University, USA,
spalvia@liu.edu, 732-218-5041
Prashant Palvia, University of North Carolina at Greensboro, USA,
pcpalvia@uncg.edu, 336-334-4818
ABSTRACT
In the past, research literature has primarily focused on issues facing outsourcing clients to the neglect
of those faced by outsourcing vendors. The vendor perspective is equally important as offshore IS
vendors need to make important decisions in terms of delivering operational and strategic
performance and aligning their resources and processes in order to meet or exceed targeted
outcomes. This paper proposes and tests three-level capability–quality–performance (CQP)
theoretical framework to understand vendor outcomes and their antecedents. The first level of the
framework represents three vendor capabilities: relationship management, contract management,
and information technology management. The second level has three mediating variables
representing process quality: partnership, service, and deliverable quality. The third level has three
dependent variables representing vendor outcomes: operational performance, strategic
performance, and satisfaction. The model was tested with 188 vendor firms from India and China,
the two most popular destinations for IS offshoring. Results support the CQP framework; vendor
capabilities are significant predictors of intermediate quality measures, which in turn affect vendor
outcomes. Implications of the study findings to both theory development and IS offshore vendor
strategic decision making are discussed. This paper also explains ratings and ranking of issues
faced by IT outsourcing vendors in China and India – the two primary destinations for IT offshoring.
The results suggest that for both the Indian and Chinese vendors, the most critical issues are not
related to cultural, language and time zone differences as publicized by the popular press. Rather,
the most critical concerns IS vendors experience are issues related to work arrangements and
relationships with the client, and client’s organizational readiness for offshoring. These concerns
include gathering relevant information from the client to either help design project processes, to
respond to a call for proposal or to understand existing business processes.
Key words: Global Outsourcing, Offshoring, IT, ITES, Capability, Quality, Performance, India,
China, Issues ranking, vendors, clients
Shailendra C. Palvia is Professor of MIS at Long Island University (LIU) Post. At LIU, he was Director
of MIS during 1997-2004. He received his Ph.D. and M.B.A. from the University of Minnesota, and B.S. in
Chemical engineering from the Indian Institute of Technology in New Delhi, India. He has published over
150 refereed articles in journals -- Decision Sciences, Communications of the ACM, MIS Quarterly,
Information & Management, Communications of AIS, Journal of Information Systems, Journal of Systems
Management, International Journal of Information Management, Electronic Markets, Information
Resource Management Journal, Journal of Industrial Management and Data Systems, Journal of Global
Information Management, Journal of Information Systems Education, conference proceedings, and
books. As Founding Editor, he edited the Journal of IT Case and Application Research (JITCAR) during
1999-2007. Prashant Palvia is Joe Rosenthal Excellence Professor in the Bryan School of Business &
Economics at the University of North Carolina at Greensboro. He received his Ph.D. from the University of
Minnesota. He works extensively in the field of Global Information Technology Management (GITM) and
chairs the annual GITMA world conference. Professor Palvia is the Editor-in-Chief of the Journal of Global
Information Technology Management and has published 96 journal articles in such outlets as the MIS
Quarterly, Decision Sciences, CACM, CAIS, Information & Management, Decision Support Systems, and
ACM Transactions on Database Systems, and over 170 conference articles. He has co-edited four books
on Global Information Technology Management.
Tenth Annual International Daejeon, South Korea P a g e | 67
Smart Sourcing Conference June 28-29, 2012