Offshoring Information Technology: Sourcing and Outsourcing to a Global Workforce - Erran Carmel, Paul Tjia (1st Edition).pdf

Offshoring Information Technology: Sourcing and Outsourcing to a Global Workforce - Erran Carmel, Paul Tjia (1st Edition)

Table of Contents

Part I The fundamentals 1
1 The offshore landscape 3
Historical context and lessons for the future 5
The Offshore Stage Model: progression and diffusion 8
Strategic advantages 10
Offshore challenges 12
What is done offshore? 13
The demand for offshore work 18
The offshore supply 24
IT-enabled services 28
Concluding comments 30
2 Offshore economics and offshore risks 31
Labor arbitrage: finding the lowest wages 31
Transactions Costs and Total Savings from Offshore Strategy 34
Extra offshore costs 36
What is the bottom line? Does offshoring lead to cost savings? 40
Case study – Calculating the extra offshore costs at a giant
American corporation 41
Offshore risks 44
Concluding lessons 50
3 Beginning the offshore journey 51
Phase 1: Laying the foundation 53
Phase 2: Identifying the providers 60
Phase 3: Assessing and selecting the provider 64
Concluding lessons 68
4 The offshore country menu 69
Three tiers of software exporting countries 69
What country to choose? 71
Case study – Sport Systems Inc. shops creatively for an offshore
provider 77
Country sketches: the Big Three and eight more 79
Part II Managerial competency 91
5 Offshore strategy 93
Cost-reduction strategy 94
Leveraging offshore strategically: beyond cost savings 96
Strategic perils 101
Strategic collaboration: offshore business models 103
Case study – GE in India 107
Concluding lessons 111
6 Offshore legal issues 112
Key legal considerations in offshoring 112
Principal deal structures 119
Agreement structures 121
Key service agreement terms 124
7 Managing the offshore transition 130
Knowledge transfer 130
Case study – Knowledge transfer by “Eating Your Own Dog Food” 133
Change management 135
Case study – The ups and downs of building support for offshoring
at a giant US corporation 137
Governance in offshore outsourcing 140
Concluding lessons 148
8 Overcoming distance and time 149
We like to be close 149
Understanding the problems of distance 151
Formalize and informalize 154
Managing time differences 160
Collaborative technology 164
Case study – Intel’s vision for new collaboration technologies 166
vi Contents
Selecting the right people for distributed collaboration 170
Distance considerations in organizational design 171
Concluding lessons 174
9 Dealing with cross-cultural issues 175
What is culture? 175
Cultural orientations 176
Does culture matter? 180
Technology and cultural differences 184
Steps to improve cross-cultural communication 185
Case study – Why the project was late: cultural miscommunication
in an Indian–American collaboration 187
Case study – In a Russian sauna with the Dutch manager 190
Case study – Offshoring usability to India 193
Part III Other stakeholders 197
10 Building software industries in developing nations 199
Choosing a national strategy 200
Why developing nations should invest in building a software export
industry 207
Principal success factors 210
Concluding lessons 218
11 Marketing of offshore services: the provider perspective 219
Lessons from marketing strategies of the largest offshore providers 221
The first steps 224
Local marketing activities 229
Dealing with prospective clients in business discussions 232
Country branding – marketing your country 236
External assistance with market entry 238
Concluding lessons 240
12 Offshore politics 241
The immediate policy issue: job loss and wage decline 241
Reactions to the backlash 242
The longer-term policy issues 245
Concluding lessons 248