Competitiveness of offshore service providers : a study of information technology firms in India

Abstract

The international outsourcing of information technology services has experienced rapid growth over the Iast decade. This growth has been particularly remarkable among offshore service providers (OSPs) in developing countries servicing clients in advanced industrialised countries. During the same period, research on international outsourcing has also increased rapidly. However, most research to date on the topic has tended to focus the experience of western firms with outsourcing while the experience of the OSPs, particularly from developing countries, remains a neglected area of research. This is despite the fact that OSPs play a critical role in their client's performance and competitiveness. This study attempts to fill several important gaps in the literature by firstly investigating the behaviour and performance of OSPs and secondly by focussing on OSPs from India in order to increase our understanding of the competitiveness of OSPs from developing countries. The research adopts a two stage investigation. First, an exploratory study is undertaken to identify key factors which contribute towards the competitiveness of OSPs. Second, based on the findings of the exploratory study, an industry wide survey is undertaken to assess the extent to which various factors contribute towards the competitiveness of OSPs. The study identified four key factors, namely top management global orientation, human resource orientation, external sources of knowledge and partnership quality. The main findings suggest that Indian OSPs draw their competitiveness from having talented top management teams with a global mindset and superior ability to recruit, retain, train, develop and deploy human capital. The ability of OSPs' to maintain high quality partnership relations with their clients and their ability to leverage knowledge from external sources also contribute positively to their competitiveness. However, contrary to expectations, the competitiveness of OSPs does not appear to be related to their ability to manage Ienowledge internally. The findings are interesting in that they shed light on some key determinants of competitiveness for OSPs from a developing country. The study also discusses the implications for other emerging developing countries competing in the IT offshoring sector. The limitations of the findings are also discussed.