ANG, S. AND STRAUB, D.W. 1998. Production and Transaction Economies and IS Outsourcing: A Study of the U.S. Banking Industry. MIS Quarterly 22, 4 (Dec.), 535-552.

This article investigates the economic determinants of IS outsourcing (not offshoring) in the US banking industry. The article uses financial indices from the Federal Reserve Bank and information from senior IT managers in 243 US banks. The authors found that IS outsourcing in US banks was strongly influenced by production cost advantages and slightly by transaction cost advantages. Financial slack ("financial resources in excess of what is required to maintain the organization") was not found to be an explanation of outsourcing.

BROWARD DAILY BUSINESS REVIEW. 2004. Offshoring Begins to Reveal Hidden Costs that Reduce Its Benefits. Broward Daily Business Review 45, 98 (April 28) 8.

The article discusses hidden risks and costs in an outsourcing contract. Some of the issues discussed include the short amount of time to consider the legal and financial factors before signing a contract, the need to avoid "scope creep" in a fixed-price project, understanding about whether subcontracting will be allowed, setting performance standards and penalties that are clear and meaningful to both sides, the differences between different national legal systems and how they will affect the upholding of the contract, differences in intellectual property laws and their enforcement (both copyright and trademark), how labor laws in the vendor country affect the client's employees who come to work with the vendor, severance packages required by law to employees replaced by foreign workers, protection of trade secrets and confidentiality provisions, national regulatory practices in such application areas as banking and medical practice, currency fluctuation problems, established arbitration procedures when things go wrong, and political stability of the vendor nation.

BURN, J.M., MA, L.C K., AND NG TYE, E. M. W. 1995. Managing IT Professionals in a Global Environment. Computer Personnel (July) 11-19.

This study, by three researchers at Hong Kong Polytechnic University, looks at perceptions of working environments by IT professionals in their first five years after graduation and compares them to the expectations of final-year IT students. For cross-comparison purposes, data was collected from IT workers and IT students in both Hong Kong and the United States. Topics include difference in psychological and cultural factors between US and HK workers; differences in training offered and training desired by the workers; differences in reward systems and career paths in the two countries; and differences in attitudes in the two countries about fair treatment, teamwork, feedback and promotion inside IS environments.

CARMEL, E. AND NICHOLSON B. To appear. Small Firms and Offshore Software Outsourcing: High Transaction Costs and their Mitigation. Journal of Global Information Management.

Abstract from preprint. It seems surprising that small firms engage in offshore outsourcing given that they lack the resources that large firms possess to overcome the difficulties involved. We examine these factors using transaction cost theory's three stages: contact costs, contract costs, and control costs. Then, using our field data culled from small client firms, intermediaries, and offshore vendors, we analyze the mitigation approaches that have appeared to reduce transaction costs for small firms. We identify nine such approaches: three for client firms and six for suppliers. For the small client firm, they are liaisons of knowledge flows, gaining experience, and overcoming opportunism; and, for the service providers, they are: onshore presence, reducing contact costs, simplifying contracting, providing control channels, expertise intermediaries, and standardization of services.

CARMEN, E., AND TIJA, P. 2005. Offshoring Information Technology. Cambridge University Press.

This is a book intended to educate CIOs and other IT executives about the opportunities and risks of offshoring. The first part of the book discusses fundamentals of offshoring: defining terms, offshoring economics, identifying offshore providers, and selecting the right country. The second part discusses managerial competency, including offshore strategy, legal issues, managing the transition, overcoming distance and time, and handling cross-cultural issues. The third part discusses other stakeholders, including building software industries in developing nations, the provider perspective on marketing of offshore services, and political issues. Carmel is a business school professor in the United States (American University); Tjia is an IT consultant in the Netherlands.

CARR, N. 2004. Does IT Matter? Harvard Business Press, Boston, MA.

Description from Carr's Web site. In this article, published in the May 2003 edition of the Harvard Business Review, I examine the evolution of information technology in business and show that it follows a pattern strikingly similar to that of earlier technologies like railroads and electric power. For a brief period, as they are being built into the infrastructure of commerce, these "infrastructural technologies," as I call them, open opportunities for forward-looking companies to gain strong competitive advantages. But as their availability increases and their cost decreases - as they become ubiquitous - they become commodity inputs. From a strategic standpoint, they become invisible; they no longer matter. (See also the HBR rebuttals to the Carr thesis in their August 2003 issue, and Carr's own Web site at http://www.nicholasgcarr.com/articles/matter.html .)

CURRIE, W. 2000. The Supply Side of IT Outsourcing: The Trend Towards Mergers, Acquisitions, and Joint Ventures. International Journal of Physical Distribution and Logistics Management 30, 3/4, 238-254.

Although the article is a little dated, it provides useful information about the somewhat neglected topic of the supply side of IT outsourcing since most of the management literature has been focused on client strategies. The focus is mainly on large IT service providers based on UK examples and shows how these companies use strategies of mergers, acquisitions, and joint ventures across vertical markets. The paper discusses the growing complexity of outsourcing deals and analyzes the actions of various kinds of players, including consulting firms.

DAVIDOW, W. H. AND MALONE, M. 1992. The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st Century. Harper Business Pres,, New York, New York.

Description from Harper Business. A fascinating examination of the new strategies used by the most advanced corporations that are propelling the current industrial revolution.

DELOITTE CONSULTING 2005. Calling a Change in the Outsourcing Market: The Realities for the World's Largest Organizations (April).

This report provides a more cautionary view of outsourcing than most current studies. It argues that outsourcing can introduce complexity, increase cost and friction, and increase the need for senior management attention; and that contracts with their outsourcing vendors cannot protect clients from customer damage and business loss from service disruption. Vendor structural advantages do not necessarily result in cheaper, better, or faster services and can often be duplicated in the client's firm. The authors recommend outsourcing only commodity functions, keeping outsourcing contracts short in duration to prevent vendor dependency, actively manage against service disruptions, and insist upon transparency to avoid hidden charges. Consolidation in the outsourcing industry is expected to limit a client's future bargaining power in contracting for outsourced services. (American Electronics Association Report, Losing the Competitive Advantage: The Challenge for Science and Technology in the United States. Feb. 2005.)

DIROMUALDO, A., AND GURBAXANI, V. 1998. Strategic Intent for IT Outsourcing. Sloan Management Review, 67-80.

This paper gives a management analysis of the strategic reasons for IT outsourcing (not offshoring). It follows on Gurbaxani's 1996 paper in which he describes three objectives: improving IS (do IS better), business impact (use IT to achieve better business results), and commercial exploitation (exploit IT assets externally). For each of these objectives, the authors identify four sub-objectives. For example, IS improvement objectives include improving productivity of existing IT resources, upgrading existing IT resources, introducing new IT resources and skills, and transforming IT resources and skills. Examples are given of a number of actual companies.

DOSSANI, R. AND KENNEY, M. 2003/2004. Moving Tata Consultancy Services into the Global Top 10. Journal of Strategic Management Education 1, 2, 383-402.

This is an excellent case study of management issues faced by TCS, the largest offshoring firm in India. The offshoring business is dynamic, with new kinds of businesses popping up as the major new opportunity emerges every several years. The article analyzes the management decisions TCS faced as the established offshore leader in software services on whether to enter the rapidly growing business process outsourcing segment of the market. Would they gain synergies between their software services and BPO businesses? Would entering the BPO market harm their plans for moving up the value chain to more profitable business? Should they enter the BPO business through acquisition or internal growth? These questions are carefully answered in this article. Accompanying the article are two notes. One is an 8-page Industrial Note that defines the software services business and examines its origins and development in India. The other is an 11-page Teaching Note that uses the software engineering waterfall model and some of Michael Porter's business concepts to better understand how TCS approached the issue of entering the BPO business.

GOO, J., KISHORE, R. AND RAO, H. R. 2000. A Content-Analytic Longitudinal Study of the Drivers for Information Technology and Systems Outsourcing. In Proceedings of the 21st International Conference on Information Systems. Brisbane, Queensland, Australia. 601-611.

This article, by three management school professors at SUNY Buffalo, describes their project to identify the key drivers of IT outsourcing. The project is still underway so this article only reports on the taxonomy they have developed and does not identify which of the potential drivers are most commonly at play (possibly varying by time or by the procuring industry).

GURBAXANI, V. 1996. The New World of Information Technology Outsourcing. Communications of the ACM (July) 45-46.

This article is somewhat dated and focused on outsourcing rather than offshoring. However, it provides some useful information. The beginning of the paper talks about early watershed development in outsourcing. The second half of the paper talks about three kinds of strategic intent for outsourcing: IS improvement, business impact, and commercial exploitation. The author argues that, contrary to the conventional wisdom that companies outsource IS activities that are commodified, managers are willing to outsource IT even if they think the work is strategic because they view outsourcing as "the means by which they can realize the strategic potential of IT, something they have been unable to realize through in-house IT departments."

HEEKS, R. KRISHNA, S., NICHOLSON B., AND SAHAY, S. 2001. Synching or Sinking: Trajectories and Strategies in Global Software Outsourcing Relationships. IEEE Software 18, 2, 54-60.

Abstract from paper. Clients and software developers need to move their global outsourcing relationships up the value chain to reap greater benefits. Yet such moves bring costs and risks. The authors investigate the strategies that differentiate successful and unsuccessful value chain moves. Case studies from longitudinal research identified synching as a key success strategy: building client-developer congruence along six identified dimensions. Synching can be problematic because distance still matters in our supposedly borderless world. Distance particularly constrains the synching of tacit knowledge, informal information, and cultural values. Clients must recognize this - and the external shocks to synching that occur over time - and adopt appropriate buffering tactics.

KAKABADSE, N. AND KAKABADSE, A. 2000. Outsourcing: A Paradigm Shift. Journal of Management Development 19, 8, 670-728.

The article provides a literature review and identifies the current trends in outsourcing [not offshore outsourcing] as of the year 2000, considering both economic analysis and management and leadership issues. The bibliography is extensive, but both the literature cited and the issues studied are beginning to show their age. Topics include the analysis of scale economies and strategic sourcing as principal reasons for outsourcing; the move from outsourcing single functions to outsourcing entire processes; the change in decision-making from the hands of the IT manager to the CIO, CFO, or CEO; the importance of keeping core activities in-house; global competition, downsizing, flatter organizational structure, technological change, and emphasis on core competencies as drivers of outsourcing; the willingness to outsource when services and goods become commodified; movement from a jack-of-all-trades to a suite of best-of-breed outsourcers; the rapid growth of data centers, client/servers, help-desk applications, and business process as outsourced functions; the importance of the quality of vendor-client relations; the opportunities for applications and business service providers supplying their products and services online; the opportunities provided by outsourcing to have access to technical talent, stabilize or lower overhead costs, and provide flexibility under changing market conditions; the disadvantages of outsourcing such as becoming dependent on outside suppliers, losing control over critical functions, managing relationships when things go wrong, and morale of employees; the limited satisfaction of clients who outsource because of underestimation of time and skills needed to manage outsourcing contracts, unrealistic expectations concerning outcomes, lack of ownership clarity, unsatisfactory delivery of services, uncooperative vendor behavior, excessive costs of the service, and loss of a competitive advantage in the marketplace; and the harm outsourcing may cause to the client's organizational culture.

KOH, C., TAY, C., AND ANG, S. 1999. Managing Vendor-Client Expectations in IT Outsourcing: A Psychological Contract Perspective. In Proceeding of the 20th international Conference on information Systems. Charlotte, NC. (Dec.) 512-517.

The article discusses the psychological expectations that a vendor and client each hold when they enter into an IT outsourcing relationship. The authors interviewed clients and vendors and then conducted a quantitative study. The authors are all at the Nanyang Business School in Singapore. In the literature review, the authors pointed to previous work that argued that "in an outsourcing situation where a firm's employees are transferred to a service provider, the outsourcing firm (client) still retained the old mental schemas and continued to treat the outsourced employees in the same way." This persistence of expectations affected the degree of fulfillment of the contract. Their basic empirical result is that successful projects had more fulfilled vendor expectations and more fulfilled client expectations than unsuccessful projects. There was a statistically significant difference between a successful and a failed project on vendor expectations concerning client staffing, client staff turnover, knowledge transfer, client leadership, relationship building, client responsiveness, and project monitoring, but no statistically significant difference on project specifications, fair compensation, and prompt payment. The authors found a statistically significant difference between a successful and a failed project on client expectations concerning role clarity, vendor staffing, vendor staff turnover, knowledge transfer, vendor initiative, relationship building, vendor responsiveness, and soft deliverables, but no statistical difference on project scoping, project pricing, or project feedback.

MALONE, T. 2004. The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life. Harvard Business School Press, Cambridge, MA.

Book description from Harvard Business School. For more than a decade, business thinkers have theorized about how technology will change the shape of organizations. In this landmark book, renowned organizational theorist Thomas Malone, co-director of MIT's "Inventing the Organizations of the 21st Century" initiative, provides the first credible model for actually designing the company of the future. Based on 20 years of groundbreaking research, The Future of Work foresees a workplace revolution that will dramatically change organizational structures and the roles employees play in them. Technological and economic forces make "command and control" management increasingly less useful. In its place will be a more flexible "coordinate and cultivate" approach that will spawn new types of decentralized organizations-from internal markets to democracies to loose hierarchies. These future structures will reap the scale and knowledge efficiencies of large organizations while enabling the freedom, flexibility, and human values that drive smaller firms. This book explores the skills managers will need in a workplace in which the power to decide belongs to everyone. Thomas W. Malone is the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management and the founder and director of the MIT Center for Coordination Science in Cambridge, Massachusetts.

NEW YORK ACADEMY OF MANAGEMENT 2004. The Outsourcing Threat Is: a) Big, b) Small, c) Both. Washington Post (June 13) B4.

This article provides excerpts from a roundtable discussion held by teleconference on May 18, 2004, and organized by the New York-based Academy of Management, a leading professional organization for people who study management and organizations. Further information can be found at http://www.aomonline.org/. The transcript provides an excellent snapshot of many of the issues and perspectives on offshoring from the academic management community. Some of the topics, all of which receive only brief discussion, include the percentage of US jobs being offshored, the risk to the accounting and banking industries of jobs being offshored, the respective size of labor pools of developed nations as compared to non-developed nations, the need for more expenditures on education to compensate for offshoring and quandaries about the kind of education to provide, the difficulties of rapidly retooling service workers for knowledge work, the loss of a college degree as a guarantee of lifetime employment, and the long-term perspective on the rise of China and India in the world economy.

NICHOLSON, B. AND SAHAY, S. 2001. Some Political and Cultural Implications of the Globalization of Software Development: Case Experience from UK and India. Information and Organization 11, 1, 25-43.

Abstract from the paper. Global outsourcing of software development is a phenomenon that is receiving considerable interest from North American and European companies currently under pressure to meet their growing manpower resource shortages and find new ways to cut costs. However, these outsourcing arrangements are technologically and organizationally complex and present a variety of challenges to manage effectively. In this paper, we discuss results from an ongoing longitudinal study of a British firm's attempts to develop and manage global software outsourcing arrangements with an Indian software company. More specifically, we focus on understanding management challenges along three key dimensions of culture, organizational politics, and the process of distributed development across space and time. The process of globalization provides the context within which these management challenges can be investigated.

PRAHALAD, C.K , AND HAMEL, G. 1990. The Core Competence of the Corporation. Harvard Business Review 68, 3 (May-June) 79-93.

Description from Harvard Business Review. A company's competitiveness derives from its core competencies and core products. Core competence is the collective learning in the organization, especially the capacity to coordinate diverse production skills and integrate streams of technologies. First companies must identify core competencies which provide potential access to a wide variety of markets, make a contribution to the customer benefits of the product, and are difficult for competitors to imitate. Next companies must reorganize to learn from alliances and focus on internal development. (McKinsey Award Winner)

ROY, V. AND AUBERT, B. A. 2002. A Resource-Based Analysis of IT Sourcing. The DATA BASE for Advances in Information Systems 33, 2, 29-40.

This information science paper examines the factors that influence an organization when deciding to keep development of an information system in-house or outsource it. The most relevant part of the paper to offshoring is the literature review, which briefly discusses the various approaches to studying this problem theoretically: an economic approach, focusing on coordination and governance of economic agents; a social approach, focusing on the relationships between clients and service providers and issues of power, trust, and culture; a strategic management approach, focusing on how organizations use strategy to achieve their goals; a political approach, focusing on political behavior rather than economic rationality; and (the approach the authors favor) a resource-based approach, focusing on the resources required to perform required activities and the strategic value of these resources. A theoretical model is constructed using the resource-based approach and a case study examined. There is no discussion of offshoring specifically. Both authors are professors of information science at HEC Montreal.

SABHERWAL, R. 1999. The Role of Trust in Outsourced IS Development Projects. Communications of the ACM 42, 2 (Feb.) 80-86.

The article is not about offshoring but rather about the importance of building up trust between client and vendor. The article is based on an examination of 18 cases of outsourced IS development (13 from the vendor's perspective). The paper describes four kinds of trust: (1) calculus-based trust, rooted in the rewards and punishment structures of the project; (2) knowledge-based trust, depending on the parties knowing one another well; (3) identification-based trust, built on the two parties identifying with each other's goals; and (4) performance-based trust, built upon early successes which help to build further cooperation and trust.

SAHAY, S., NICHOLSON, B. AND KRISHNA, S. 2003. Global IT Outsourcing. Cambridge University Press, Cambridge, UK.

From Amazon.com. This book offers key insights into how to manage software development across international boundaries. It is based on a series of case studies looking at the relationships between firms from North America, the UK, Japan and Korea with Indian software houses. In these case studies, which have typically been compiled over a 3-4 year timespan, the authors analyze the multi-faceted challenges encountered in managing Global Software Alliances (GSAs). The challenges range from the conflicts that managers face when dealing with distance, to the tensions of transferring knowledge across time and space, to issues in trying to establish universal standards in a context of constant change, and the problems of identity that developers and clients experience in having to deal with different organizations and countries. Throughout the book, the authors draw on their extensive research and experience to offer constructive advice on how to manage GSAs more effectively.