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THEORETICAL DEVELOPMENT Utilizing systems theory to understand complex phenomena, we examine three aspects of offshore IS vendors: inputs, process and outputs. These three aspects can be broadly classified as: management capability (input), process quality (process), and performance (output). This translates into a three-level capability-quality-performance (CQP) theoretical framework. The first level of the framework represents three vendor capabilities: relationship management, contract management, and IT 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. We propose the “Capability-Quality- Performance (CQP)” model for evaluating vendor outcomes in an outsourcing relationship (Figure 1). CAPABILITY LEVEL I Relationship Management Capability (RMC) Contract Management Capability (CMC) IT Management Capability (IMC) HYPOTHESES Figure 1. The Capability-Quality-Performance (CQP) Model The Capability – Quality Linkage For this linkage, we propose the following five hypotheses. H3 H5 H1 Partnership Quality (PQ) Service Quality (SQ) Deliverable Quality (DQ) H1: IS vendor’s relationship management capability is positively related to its partnership quality. H2: IS vendor’s relationship management capability is positively related to its service quality. H3: IS Vendor’s contract management capability is positively related to its service quality. H4: IS vendor’s contract management capability is positively related to its deliverable quality. H5: IS vendor’s IT management capability is positively related to its deliverable quality. The Quality – Performance Linkage Under this linkage, we propose yet another five hypotheses as follows. H4 H2 QUALITY LEVEL II H6: IS vendor’s partnership quality is positively related to its operational performance. PERFORMANCE LEVEL III Operational Performance (OP) Strategic Performance (SP) Satisfactio n (SAT) Tenth Annual International Daejeon, South Korea P a g e | 68 Smart Sourcing Conference June 28-29, 2012 H9 H6 H10 H7 H8
H7: IS vendor’s partnership quality is positively related to its strategic performance. H8: IS vendor’s partnership quality is positively related to satisfaction. H9: IS vendor’s service quality is positively related to satisfaction. H10: IT Vendor’s deliverable quality is positively related to its strategic performance. METHODOLOGY Measures Survey data from outsourcing vendors in Indian and China were used to test our research model and hypotheses. Relationship management capability was measured using three items that were adapted from the works of Lee and Kim (1999), Holmström et al. (2006) and Kumar and Palvia (2002). Contract management capability was measured using two items that were adapted from the works of Richmond & Seidman (1993), Kumar and Palvia (2002) and Poppo and Lacity (2006). IT management capability was measured using four items that were developed based on the concepts suggested by Bharadwaj (2000), Swinarski, et al. (2006) and Subramani (2004). Partnership quality was measured using four items that were developed based on the work of Lee and Kim (1999), Lee (2001), and Grover et al. (1996). Service quality was measured using six items that were adapted from the SERVQUAL items developed by Parasuraman et al. (1988) and from Lee and Kim (1999). Deliverable quality was measured using three items that were adapted from the works of Paulk et al. (1993), Lee and Kim (1993), Holmström et al. (2006); and Kumar and Palvia (2002). The dependent variables were measured using the outsourcing/offshoring success scales developed by Grover et al. (1996), Levina and Ross (2003) and Lee and Kim (1999). All items were assessed using a seven-point Likert-type scale. Regarding critical issues, after pretesting with professional colleagues, the instrument included a total of 21 issues as shown in Table 1. Table 1. The Critical Issues Instrument Issue Description 1. Lack of communication with the client during critical phases of designing the processes. 2. Gathering data to make a compelling proposal to the client. 3. Availability of experts on the client’s processes (or systems) during knowledge transfer. 4. Attrition of our company’s staff by the client before completion of knowledge transfer. 5. Lack of documentation of client’s existing processes (or systems). 6. Unclear communication channels with the client. 7. Reaching agreement with the client on the ROI (Return on Investment). 8. Lack of involvement from the client’s top management team. 9. Attrition of the client staff before completion of knowledge transfer. 10. Poorly designed network infrastructure at our own offshore site. 11. Client’s readiness to reengineer process before outsourcing. 12. Unclear roles and responsibilities of the client’s employees. 13. Legal and regulatory concerns. 14. Resistance from client’s employees to outsourcing. 15. Client’s short term objective focused only on cost savings (rather than long-term benefits). 16. Inadequate staffing at the client end. 17. Poorly designed network infrastructure at the client site. 18. Language differences between our employees and the client’s employees. 19. Time differences between our country and the client’s country. 20. Organizational culture differences between our company and the client. 21. National culture differences between our country and the client’s country. Tenth Annual International Daejeon, South Korea P a g e | 69 Smart Sourcing Conference June 28-29, 2012
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2012 Global Sourcing of Services: B
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Center for Global Outsourcing Tenth
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Center for Global Outsourcing 26 Be
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Dear Conference Participants: I wou
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Center for Global Outsourcing 26 Be
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2012 June 28 8:00AM-5:30 PM Registr
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2012 June 29 8:00AM-12:00PM Registr
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Contemporary Issues and Challenges
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Introduction Outsourcing is contrac
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