Operational capabilities development in mediated offshore software services models
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Research article
Operational capabilities development in mediated offshore software services models Sirkka L Jarvenpaa1, Ji-Ye Mao2 1
Center for Business, Technology, and Law, University of Texas at Austin, Austin, TX, USA; School of Business, Renmin University of China, Beijing, P.R. China
2
Correspondence: J-Y Mao, School of Business, Renmin University of China, 59 Zhongguancun St., Beijing 100872, P.R. China. Tel: þ 86 10 8250 9189; Fax: þ 86 10 8250 9169; E-mails: [email protected], [email protected]
Abstract The paper expands theoretical and empirical understanding of capabilities development in the mediated offshore outsourcing model whereby a small or a medium-sized firm delivers offshore software services to a larger information technology firm that in turn contracts and interfaces with the actual end-client onshore firms. Such a mediated model has received little prior research attention, although it is common particularly among Chinese firms exporting services to Japan, the largest export market for Chinese software services. We conducted case studies in four China-based software companies to understand the mechanisms used to develop their operational capabilities. We focused on client-specific, process, and human resources capabilities that have been previously associated with vendor success. We found a range of learning mechanisms to build the capabilities in offshore firms. Results show that the development of human resources capabilities was most challenging in the mediated model; yet foundational for the development of the other capabilities. This paper contributes to the information systems literature by improving our understanding of the development of operational capabilities in small- and medium-sized Chinese firms that deploy the mediated model of offshore software services. Journal of Information Technology (2008) 23, 3–17. doi:10.1057/palgrave.jit.2000125 Keywords: offshore outsourcing; software services firms; operational capabilities; learning mechanisms
Introduction ffshore outsourcing, or offshoring, involves crossing national boundaries to purchase services. Although offshoring includes both activities contracted to independent third parties abroad and international insourcing to foreign subsidiaries, here we will only consider the former. Offshoring of services is critically dependent on a supply of providers (vendors) that have operational capabilities to offer comparative cost advantage, satisfactory quality, and ontime delivery despite the differences in distance, time zones, and culture (Carmel and Tjia, 2005). Yet, the literature on information technology (IT) offshoring as well as outsourcing of IT services more generally has largely focused on customers (particularly in the US and Europe) (e.g., Willcocks and Lacity, 2000, 2007; Goles, 2001). The vendor perspective has been much less studied (Levina and Ross, 2003; Feeny et al., 2005; Borman, 2006).
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In the context of offsho
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