With
the maturity of information and communication technology,
the cost of communication has reduced drastically, allowing
relatively small companies to establish business relationships
across different geographical domains. The primary motivation
behind offshore development is cost, since with low per capita
labor costs, clients can benefit from moving as much development
work offshore as possible (Gopal, Mukhopadhyay and Krishnan,
2002). However, Kaiser and Hawk (2004) argue that offshore
software development will increase for reasons beyond cost
reduction as knowledge transfer cannot be assessed as a purely
economic decision. This potential has been recognized by the
Indian software market, which has opened itself up to the
fast moving global economy. "India presently dominates
80-90% of the total offshore development revenue worldwide
and is expected to be the key leader in offshore outsourcing
in the next five years" (Khan, Currie, Weerakkody and
Desai, 2003, p. 240). The changing trend of software development
work is also evident in today's market figures. As demand
for Indian software professionals is increasing, their prices
are also increasing, so profit margins are shrinking and outsourcing
in India is now getting susceptible to global competition
(Kiviat, Rajan, Thomas and Tumulty, 2004). Alternative countries
like Russia, China, and the Philippines are emerging key producers
of software, thus intensifying competition, and Indian firms
are getting mindful of this long-term threat. Moreover, the
demands and expectations from the clients are also constantly
increasing, and outsourcing supplier firms are in a "process
of continuous learning, reflexivity, and re-negotiating the
terms of relationship" (Sahay, Nicholson and Krishna,
2003, p. 22).
The
literature of information systems outsourcing and offshore
software development considers mainly a customer or global
perspective rather than the offshore software supplier perspective
(RajKumar and Mani, 2001). Therefore, how software suppliers
utilize their organizational assets and re-define and re-negotiate
client relationships with local and dispersed knowledge in
the global software development scenario needs to be studied
empirically. There is a need for unbiased empirical studies
by academics to address the existing research gaps (Rottman
and Lacity, 2004). A case study of an Indian software supplier
was undertaken to understand their approach to relationship
management and maintaining longevity of the outsourcing relationship
with the client as they compete in this dynamic race of global
outsourcing. An analysis of such work in practice provides
interesting insights from the vendor's perspective into how
client-vendor relationships can be effectively conducted in
conditions of globalization. |
