2009 December 07

Jours fixes take place on the first monday of the month, starting at 5:00 p.m., in the House of Finance (Campus Westend).

[Robert Gregory, E-Finance Lab]

Offshore outsourced information systems (IS) development projects are receiving increasing attention as boundaries of international collaboration are disappearing and services are being disaggregated, produced, and delivered globally. However, obstacles resulting from client-vendor distance pose unique management challenges we are just beginning to understand. Therefore, we conducted a longitudinal case study of a German-Indian relationship in the financial services industry and developed a process model of IS offshore outsourcing relationship development to shed light on the evolutionary processes and dynamics that are involved in this context. Adopting a grounded theory research approach, we identified three themes from our analysis: trust, control, and learning. Guided by the plural governance perspective, which emphasizes a balanced mix of different types of control as most effective for the governance of economic exchange relationships, as well as trust and learning literature, we analyzed the interplay and evolution of trust, control, and learning in and across each phase of the project and developed a process model. Our findings suggestthat a more holistic and integrated theoretical perspective that incorporates concepts of learning, trust, and control (what we refer to as an evolutionary plural governance perspective), is capable of deliveringdetailed insights into the successful management of IS offshore outsourcing relationships.  In particular, we find that a balanced mix of formal and social controls contributes to success and a trust-based relationship. In addition, our analysis demonstrates the importance of learning (development of cultural intelligence and absorptive capacity) and trust and their dynamic interplay with decisions on the portfolio of controls. Learning and trust play a critical role for the balancing and continuous re-balancing of controls over time and for successful IS offshore outsourcing relationship management. In terms of implications for practice, managers should adopt a more integrated partnership perspective for managing IS offshore outsourcing in which mutual trust and joint learning is fostered.  Further, managers should be aware of the pitfalls of viewing IS offshore outsourcing relationships from a one-sided control perspective in which the client is seen as the ‘controllerÂ’ and the vendor as the ‘controllee.