Information Technology Outsourcing Provider’s Network capability
Abstract: Information technology outsourcing has been undergoing a rapid development in the pastdecades, meantime attracting much attention from the scholars to do the related research. This present
paper aims at analyzing the ITO provider’s outsourcing network that consists of various actors
encompassing the focal provider, clients, subsidiaries of MNC and acquisition targets etc and explore
what should be the network capability based on network theory and dynamic capability according tothe case of Neusoft. Generally speaking, network capability is considered as one type of dynamic
capability, involving the routines and experience of ITO providers in the aspects of network
management and learning mechanism. In addition, network management that engages on actor
management primarily classified into three successive phrases encompassing node identification, nodeembed and linkage upgrade, while learning mechanism as one critical part of network capability iscomprised by two aspects, joint knowledge creation and mutual knowledge transfer.

1. Introduction
IT outsourcing, which could date back to the mid 1980s, has become gradually more and morepopular among powerful multi-national companies and is undergoing unexpected high growth in thepast few decades. It is no doubt IT outsourcing, especially IT offshore outsourcing, will be more and more
popular in future due to its evident advantages for firm’s global competition. In present research, clientrefers to the outsourcing firm in the foreign countries, such as the United States, Japan and so on, whileprovider means the specialized supplier firm that executes business on behalf of the former, at present
the providers in India and China dominate the global outsourcing market in a large extant. In
consideration of research scope and research object in current paper, provider in current paper isrestricted into Chinese firms which supply ITO service to top companies from the USA, the Europe, Japanetc as clients.
The past research with respect to outsourcing emphasize more on firm’s resources and capability,indicating that the both client’s and provider’s capability has a positive influence on the outsourcing
performance and outsourcing success. Nonetheless, confronted with the high-velocity changing
international economic environment like the finance risk in 2009, firms, especially outsourcing firms which
involves a lot of cross-border activities, should be flexible to adjust themselves to the dynamic economicenvironment. Consequently, the introduction of dynamic capability(TEECE & PISANO, 1994; Wernerfelt,1995; Zahra, Sapienza, & Davidsson, 2006), which is developed to cope with the dynamic atmosphere,will distinguish this work with others. Simultaneously, considering that the significant effects ofinter-organizational relationship in outsourcing industry, network will be adopted to describe theinter-organizational relationship between one provider and its clients rather than the past research
merely paying attention to bilateral relationship between one provider and one client. Compared withother terms like partnership, alliance, employed to describe the inter-organizational relationshipbetween one provider and one client, network have two advantages whish should be stressed. 1: Thenetwork including all the important clients and their relationship is able to tell us the whole structure andthe detailed location in the global market; 2, the network could depict the dynamic process ofinter-organizational relationship between the provider and its clients. In fact, every provider has its own
outsourcing network which connects the provider with its clients, obviously the number of clients, thequality of clients, the outsourcing business from clients etc, have a direct effect on the provider’sperformance. Thus, how to manage and perfect clients under the framework of outsourcing network has
become one important issue for provider. Network capability, which is regarded as one type of dynamic
capability, will be developed in detail to manage the client relationship according to the cases in China.

Research Model

Ordinary capability

Technology capability

Human resources

Relation capital

Reconfiguration
Management
Manipulation

Network structure management
Network capability
Learning mechanism

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