The Evolution of Information Systems Offshoring Research: A Past, Present and Future Meta Analysis Review

INTRODUCTION Information Systems Offshoring (ISO) has evolved to be an important sourcing option for many organizations (Dibbern & Heinzl, 2009). Technological advances combined with increased globalization and competitive pressures have forced many firms to consider ISO as a sourcing alternative to reduce organizational cost and at the same time create and/or maintain their competitive advantage in the global marketplace. Increasingly, the phenomenon of ISO has been considered by many firms as a sourcing solution for their information systems (IS) needs. Recent estimates put the global ISO market at over $55 billion for 2008 and some estimates suggest an annual growth rate of 20% over the next five years (Oshri, Kotlarsky & Willcocks, 2009). ISO has received increased widespread attention due to its considerable impact on a diverse set of stakeholders (Niederman, Kundu & Salas, 2006). ISO directly influences a diverse set of stakeholders, including: people working in the IS industry and those considering a career the IS industry, organizations buying or offering IS services (or considering doing so), as well as nations or regions competing to retain IS work domestically or to attract the offshoring of such work. The concept of offshoring has been discussed as an organizational and a societal issue since the dawn of the Industrial Revolution (Davis, Ein-Dor, King & Torkzadeh, 2006). From an academic perspective, evidence of the increased interest and significance of ISO is demonstrated by the sheer number of research articles directly addressing ISO, along with entire special issues from top tier journals dedicated to the topic (MISQ 2008). This increased interest confirmed in recent years has contributed to our interest in investigating and reflecting on what is known about ISO. Clearly with the growing reliance and predicted growth in ISO, there is a significant need for academic researchers to learn from past research, assess the present state of ISO research and plan future research directions to support the anticipated continued growth of ISO. From our review of the literature, we feel that the ISO phenomenon has matured into its own subject field and is a viable IS sourcing solution that is differentiated from traditional IS outsourcing. What sets ISO apart from traditional IS outsourcing is the inclusion of vendor location into the definition. In ISO the third party vendor firm providing the IS products and services to the client firm is located outside of the client firm's home country (Carmel & Tjia, 2005). For example, a client located in the U.S.A. utilizing a vendor located offshore in India demonstrates ISO. The vendor's offshore location allows the client firm purchasing the IS products and services to take advantage of the inherent lower cost international labor arbitrage (King, 2008). Organizations have traditionally turned to the outsourcing of activities in search of cost savings among other reasons. However, as long as the third party vendor operates in the same country the achievable cost savings tend to be limited. The restrictions on cost savings as well as the continuous increase in global competition prompted firms to look worldwide for new profitable ways to structure IS operations. In this context, the labor costs differences and the large pool of highly qualified workers in low-wage countries like India promoted the growth in ISO (Post & Pfaff, 2007; Sahay, Nicholson & Krishna, 2003; Willcocks and Lacity, 2006). The addition of a global external location in relation to the client firms location contributes to a number of unique differences, challenges and risks associated with ISO when compared to traditional IS outsourcing (Carmel & Agarwal, 2002; Wei & Peach, 2006). Examples of these unique aspects include: cultural differences (Winkler, Dibbern & Heinzl, 2008), time zone differences (Rottman & Lacity, 2004), communication challenges (Zatolyuk & Allgood, 2004), geopolitical (Ranganathan & Balaji, 2007), infrastructure (Rao, 2004), legal and security (Balaji & Ranganathan, 2006), etc. …