Global Outsourcing of software and services: The Indian experience

Professor S.Krishna IIM Bangalore

Strengths ( Generally written about )

Prevalence of English Language Large technologically educated, inexpensive manpower Diaspora links

Accompanied by serious infrastructural problems and policy restrictions which deter business growth

Indian Government Initiatives and policies

which have helped the Industry
Starting of Indian Institutes of Technology in mid 1950s to 1960s Software Technology Parks in late 1980s Tax concessions for exports. Broad and limited in impact Several other policies have had a negative impact

Government Actions and policies which have constrained the software Industry
Strong restrictions on hardware imports till mid80s Poor choice of location for Software Technology Parks Scant progress in infrastructure needs like airports, roads and urban environments Inability to scale up good quality education. Domestic Markets and Government use inadequate

 What has really made a difference are social,cultural and historic factors which have placed India in a unique position to benefit from a mental skill and knowledge driven industry domain.

 Long tradition- zero,chess, largest poem ( Mahabharata),literature in several dozen languages, spirituality and so on Value for intellectual activity rather than physical ones Other soft domains- For example: largest movie industry, (yoga and spirituality industry !), potential in education, management and so on Need to discuss at firm level: Micro foundations of growth, and thus the proximate cause of differences between national economic performances, lies in the capabilities of firms. The cumulative increase in firm level capabilities attract investment and drives growth Sutton

Research Program
Empirical studies involving around 300 interviews over 5 years. Several Longitudinal case studies. Interviews at Bangalore and other cities in India. Also at Canada, U.S, U.K, Singapore, Japan & Korea. Team involving researchers from India, U.K and Canada. In parallel, e-Government, IT in public health information systems and IT in rural areas Global Software Work influences and is influenced by ongoing processes of Globalization Interpretive Research :Interpretive research does not predefine dependent and independent variables but focuses on human sense making as the situation emerges. ( Klein & Myers)

 Focus on Strategic Alliances in the outsourcing context Discovering Identity Through High Technology And Global Alliances Managing Cross-cultural Issues in Global Software Outsourcing Influence of geographic dispersion on control and coordination approaches for management of software development projects e-Government in Andhra Pradesh, IT in public health information systems in Karnataka

Discovering Identity Through High Technology And Global Alliances

How do organizations develop an identity aligned with their objectives in their efforts to manage the complexity and competitiveness of global IT environment? How does organizational identity influence development and change in global software outsourcing relationships?

Theory of Being (Identity)

Theory of Action (Strategy)

Organizational Relationships & Alliances

Project Activities

Identity and Action Relationships

Startup in Silicon Valley

1989

Commence Globtel work in India

Academics enrolled

Unleashing Indias Creativity

Self Reliant Exploration

Make the right connection

1991

1993

1996

1997

1998

1999

2000

2001

Longitudinal Study Period

Observation continued

Milestones in Organizational Transformation of SRS

In the software domain where people are the most important resource, our case points to the need to be sensitive to individuals search for meaning and align it with organizational agendas and inter-organizational relationships.

Managing Cross-cultural Issues in Global Software Outsourcing Strategic Choice of Projects

Minimize cross-cultural issues through Embedded software project choice Middleware

Use relationship to learn

About lead-edge software (outsourcer) To gain domain expertise/move up the value chain (supplier) Cross-cultural match Or major effort through staffing/training

Choose applications software only when good cross-cultural working feasible

Managing the Relationship

Use systems to harmonise between outsourcer and supplier - Coordination/control systems - Processes - Technology

Understand differences in norms and values

- Hierarchy/power - Business practices

Encourage negotiated culture

- Bridgeheads and exchange mechanisms - Staffing and training

Influence of Geographic Dispersion on Control and Co-ordination approaches for Management of Software Projects

Separation of resources in time and space leads to problem in controlling and coordinating software projects Formal Approaches Output control, Hierarchies, etc. Informal Approaches Informal networks, Self control etc.

 Globalization Involves disembedding social processes from their contexts and reembedding them in new contexts ( Anthony Giddens) Facework commitment: trust relations which are sustained by or expressed in social connection established in circumstances of co-presence. Faceless commitments: development of faith in abstract systems which are symbolic tokens or expert systems.

Trust relations are basic to extended time-space distantiation associated with modernity. Trust in persons: Facework commitment Trust in systems: Faceless commitments

Greater process discipline leads to improved quality for Global software Work.

Spillover Effects

E-Government initiatives in India (in the late nineties) are an offshoot of success in software outsourcing industry
Influence both in urban and rural areasGovernment and Private initiatives

Spillover Effects (Contd.)

Training Infrastructure Trained manpower at lower costs Greater awareness and IT literacy Experience with systems in developed countries Availability of venture capital Competence and skills for localization

Policy Recommendations
Governments need not be too selective in promotional efforts. A broad range of infrastructure, education and export promotion is preferable unless a clear identification (as in the following) is possible. Strengthen and deepen industry programs where a clear fit to national character is apparent and global competitive advantage can emerge.

What next in India ?

Can Bangalore get ahead of original silicon valley ? Work by Oracle, Intel and TI is at the forefront of Technology; Bio-Tech, Space Technology, R& D, Design - GE, Daimler-Benz, Motorola Back-office to the World ? E- Government efforts- will they take root and spread ? Government efforts too little and too slow !

THANK YOU

References
Journals and Book chapters 1. Managing Cross Cultural issues in Global Software Outsourcing. (With Prof. Geoff Walsham, Cambridge University and Prof. Sundeep Sahay, Oslo University), Accepted for Publication by Communications of the ACM

2. 'Synching' or Sinking: Trajectories and Strategies in Global Software Outsourcing Relationships ( With Richard Heeks, Brian Nicholson and Sundeep Sahay) IEEE Software, Journal of IEEE Computer Society USA, Vol 10, No 2,March 2001, pp 54-61.
3. Software Work Across Borders: Discovering Identity Through High Technology And Global Alliances (With Sundeep Sahay, University of Oslo) Under review by MIS Quarterly 4. The Ontology of Space and Place in Global Software Work Arrangements: A dialectical perspective ( with Prof Sundeep Sahay) submitted to the Journal Information and Organizations 5. Competitive Advantage in the Software Industry: An Analysis of the Indian Experience Chapter in the book titled- Information Technology in Context: Implementing Systems in the developing World edited by Avgerou and G. Walsham, Ashgate Publishing, UK, 2001 6. 'Originative' Innovation and Entrepreneurship in the Information Technology industry in India ( with Abhoy K. Ojha) Chapter in E.Sridharan (Ed.) Context of Innovation India:The case of the Information Technology Industry, to be published by Palgrave, U.K.

Conference Papers
7. The Process of Building Global Software Outsourcing Relationships: TheExperience of a Multinational Vendor with Indian Contractors. (With M. Barrett, S. Sahay & B.Hinings) Presented at the International Conference on Information Systems (ICIS`97), Atlanta, Georgia, USA, December 1997 8. Influence of geographic dispersion on control and coordination approaches for management of software development projects(with Rajeev Sharma) Information Resources Management Association Global Conference, Philadelphia May 2003 9. Structuring Coordination and Communication in Global Software Work: A Case Study (with Rajeev Sharma International Federation for Information Processing 8.2 and 9.4 Joint Conference, Athens, Greece June 2003 10. Cultural Imperatives of Global Software Development- Presented at the Beijing Conference on Managing Global Business in the Internet Age held at Beijing, China, May 2000. 11. Requirements Engineering: Problem Domain Knowledge Capture and Deliberation Process Support (with Sudeep Mallick) First International Workshop on the Requirements Engineering Process. Milan, Italy, September 1999. 12. Creating the Global Manager: Understanding Identity as a Processes of Translation (With Sundeep Sahay), Presented at the IRIS Conference, Uddevala, Sweden, August 2000. 13. Competitive Advantage in the Software Industry: An Analysis of the Indian Experience (With Abhoy Ojha and Michael Barrett), Proceedings of the IFIP 9.4 conference on Information Technology in Context, at Bangkok, June 1998 14. Work Practices and Local Improvisations with Global Software teams: A case study of UK Subsidiary in India (With Brian Nicholson and Sundeep Sahay) Proceedings of IFIP 9.4 conference on Information flows, Local Improvisations and Work Practises held at Cape town, May 2000. Proceedings of the IFIP 9.4 conference on Information Technology in Context, Cape Town, May 2000