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The impact of cultural differences in offshore outsourcing—Case study results from German–Indian application development projects

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Abstract

Offshore outsourcing to vendors in foreign countries causes unique challenges which need to be understood and managed effectively. This paper explores cultural differences in IS offshoring arrangements involving German client organizations that outsource application development activities to Indian vendors. For this purpose, a research framework is developed based on both theoretical considerations and specific empirical observations from multiple case studies. The goal is to (1) explore the nature of cultural differences in offshore outsourcing arrangements in depth and to (2) analyze the relationship between those cultural differences and offshore outsourcing success. Based on the case findings, implications and practices for the management of offshore development projects are outlined. The results indicate that cultural differences in terms of power distance, IS designer values, and an active versus passive working attitude critically affect several dimensions of relationship quality, thereby influencing offshore outsourcing success. A clear definition of roles and mechanisms, strong leadership, and an active management of culture by adapting to either the client’s or the vendor’s national culture appeared to be effective ways to manage cultural differences.

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Author information

Authors and Affiliations

  1. Department of General Management and Information Systems, University of Mannheim, Schloss, S 134, 68131, Mannheim, Germany

    Jessica K. Winkler

  2. Department of General Management and Information Systems, University of Mannheim, Schloss S 135, 68131, Mannheim, Germany

    Jens Dibbern

  3. Department of General Management and Information Systems, University of Mannheim, Schloss, S 219/220, 68131, Mannheim, Germany

    Armin Heinzl

Authors
  1. Jessica K. Winkler
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  2. Jens Dibbern
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  3. Armin Heinzl
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Corresponding author

Correspondence to Jessica K. Winkler.

Appendix

Appendix

1.1 Interview guideline

  1. I.

    General project information

  2. 1.

    Please give a short description of your offshore development project:

  3. a.

    Type of project

  4. b.

    Project timeframe

  5. c.

    Offshore provider and country

  6. d.

    Project size (man days, % of total IS budget, number of people involved)

  7. II.

    Decision to offshore

  8. 1.

    What were your reasons for outsourcing application development to an offshore vendor?

  9. 2.

    What were the main drawbacks associated with offshoring during the decision process?

  10. 3.

    Who was involved in the decision process to offshore?

  11. 4.

    Who was most influential in the decision to offshore?

  12. 5.

    Have you had previous experience with...

  13. a.

    … domestic outsourcing?

  14. b.

    … offshore outsourcing?

  15. III.

    Implementation

  16. 1.

    How did you evaluate and compare potential offshore vendors?

  17. 2.

    How did you select your particular offshore vendor?

  18. 3.

    Please provide some information about your offshore development contract:

  19. 4.

    What arrangements did you make prior to the project launch during the transition phase?

  20. a.

    Meetings for top management to get to know each other

  21. b.

    Meetings for team members to get to know each other

  22. c.

    Meetings to make clear each other’s goals

  23. d.

    On-site visits

  24. e.

    Cultural training for staff

  25. f.

    …

  26. 5.

    How did the transfer of knowledge take place?

  27. 6.

    What coordination and control mechanisms do you have in place? Please describe the role of each mechanism you use.

  28. 7.

    Please describe conflict situations you encountered in cooperating with your vendor. Why did those conflicts arise? How did you address those conflicts? Were you able to resolve those conflicts?

  29. 8.

    Please describe situations in which, during the project, you had to cope with cultural differences.

  30. IV.

    Evaluation

  31. 1.

    Has the project met your expectations? Please indicate to what extent (0–100%) your expectations were met with regard to:

  32. a.

    Cost savings

  33. b.

    Quality of the vendor’s resources

  34. c.

    Increased flexibility

  35. d.

    Quality of service delivered

  36. 2.

    Overall, how satisfied (0–100%) are you with:

  37. a.

    The resulting application?

  38. b.

    The relationship with your offshore vendor?

  39. c.

    The performance of the vendor’s employees?

  40. d.

    The project as a whole?

  41. 3.

    Are you planning to have follow-up projects with this vendor?

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Winkler, J.K., Dibbern, J. & Heinzl, A. The impact of cultural differences in offshore outsourcing—Case study results from German–Indian application development projects. Inf Syst Front 10, 243–258 (2008). https://doi.org/10.1007/s10796-008-9068-5

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