Online survey to map cultural attributes of outsourcing decisions
Research Hypothesis
The objective of the survey was to ascertain if cultural attributes that go into making an outsourcing decision differ from country to country. We aim to study the following via this research.
Important factors in an IT decision
We believe that cost, past experience, reputation and technical skills do not matter equally in an IT decision. We also wanted to ascertain the relative importance of these in an IT decision, and to confirm if the importance varies across countries.
Research Hypothesis 1: The outourcing firms do not give equal reputation to factors like cost, past experience, reputation and technical skills. Also the importance of these factors varies across countries.
Research Hypothesis 1a: The importance of factors varies across countries.
Importance of criticality of decision
As per standard reasoning the rationale behind IT decisions should be based on the criticality of decision. For example, while cost could be a factor in a routine decision, factors like expertise could be critical when it comes to major decisions. We wanted to verify the hypothesis that IT decisions could vary based on the criticality of the decision in question. We also wanted to see if the importance varies across countries.
Research Hypothesis 2: The outsourcing rationale varies based on the complexity of decisions.
Research Hypothesis 2a: The importance of factors varies across countries.
Importance of cultural integration between partners
We wanted to ascertain if the importance of cultural integration between onsite and offshore partners varies across countries.
Research Hypothesis 3: Cultural values vary across countries, i.e. clients of certain countries place more, or less, importance to cultural integration than clients of outher countries.
Importance of language integration between partners
We wanted to ascertain if the importance of language integration between partners varies across countries.
Research Hypothesis 4: The importance of language as a factor varies across countries, i.e. clients of certain countries place more, or less, importance on language integration than clients of other countries.
Importance of fiscal proximity between partners
We wanted to ascertain if the importance of fiscal proximity between partners matters varies across countries.
Research Hypothesis 5: The importance of fiscal proximity as a factor varies across countries, i.e. clients of certain countries place more, or less, importance on fiscal proximity than clients of other countries.
Approach towards contract
We wanted to ascertain the hypothesis that certain countries prefer legal based systems where others prefer a more hands-on approach.
Research Hypothesis 6: The preference of approach varies across countries. While some prefer it to be legal based, others have a preference for contract based systems.
Research method
Survey procedure
An online survey was developed to collect data (http://tinyurl.com/ITGSOP). The survey was then circulated among colleagues that the author had worked with. Since the author has worked in India, the US, France and Canada, and had links across various countries, this was expected to throw light on the decision pattern of various clients. Around 300 questionaires were distributed in this manner.
Sample
We received around 107 responses(till 15 April 2011), and this 35% success rate was fairly high for a survey of this manner. The breakdown of the sample is summarized in the following tables. The results have been tabulated only for Europe and the USA, and we have ignored results for other area that were not included within the study. Also some participants chose not to answer all the questions thus leading to differing answers.
| Factors important for client while taking an outsourcing decision | ||||
| | Cost | Past Experience | Reputation | Technical Skills |
| North America | 19 | 13 | 14 | 1 |
| Europe | 7 | 5 | 1 | 5 |
| Total | 26 | 18 | 15 | 6 |
| Important factors while considering a routine outsourcing decision | ||||
| | Past experience | Cost | Reputation | |
| North America | 19 | 14 | 9 | |
| Europe | 10 | 5 | 2 | |
| Total | 29 | 19 | 11 | |
| Important factors while considering a critical outsourcing decision | ||||
| | Past experience | Cost | Reputation | |
| North America | 19 | 2 | 21 | |
| Europe | 10 | 3 | 5 | |
| Total | 29 | 5 | 26 | |
| Is cultural integration important ? | ||||
| | No | Yes | | |
| North America | 39 | 16 | ||
| Europe | 19 | 8 | ||
| Total | 58 | 24 | ||
| Is language important ? | ||||
| | No | Yes | | |
| North America | 8 | 47 | ||
| Europe | 8 | 19 | ||
| Total | 58 | 24 | ||
| Is fiscal proximity important ? | ||||
| | No | Yes | | |
| North America | 27 | 28 | ||
| Europe | 18 | 9 | ||
| Total | 16 | 66 | ||
| Preferred contract type ? | ||||
| | Hands on approach | More legal based system | | |
| North America | 27 | 28 | ||
| Europe | 18 | 9 | ||
| Total | 45 | 37 | ||
Analysis and results
We decided to run a chi-square analysis on the results to verify the hypothesis. Unfortunately we could not run hypothesis 1, 1a, 2 and 2a since we received less than 5 responses on some of the results. The results on the remaining hypothesis are as follows.
Importance of cultural integration between partners
We wanted to ascertain if the importance of cultural integration between onsite and offshore partners varies across countries.
Research Hypothesis 3: Cultural values vary across countries, i.e. clients of certain countries place more, or less, importance on cultural integration than clients of other countries.
Chi square value :0.002538798
Critical Value (probabilty 95%) : 3.841458821
Analysis : We reject the hypothesis, and based on the results ascertain that there are no marked differences between North American and European countries when it comes to the importance of cultural integration.
Importance of language integration between partners
We wanted to ascertain if the importance of language integration between partners matters varies across countries.
Research Hypothesis 4: The importance of language as a factor varies across countries, i.e. clients of certain countries place more, or less, importance on language integration than clients of other countries.
Chi square value :2.623732272
Critical Value (probabilty 95%) : 3.841458821
Analysis : We reject the hypothesis, and based on the results ascertain that there are no marked differences between North American and European countries when it comes to the importance of language integration.
Important of fiscal proximity between partners
We wanted to ascertain if the importance of fiscal proximity between partners varies across countries.
Research Hypothesis 5: The importance of fiscal proximity as a factor varies across countries, i.e. clients of certain countries place more, or less, importance on fiscal proximity than clients of other countries.
Chi square value :2.259197379
Critical Value (probabilty 95%) : 3.841458821
Analysis : We reject the hypothesis, and based on results ascertain that there are no observed differences between North American and European countries when it comes to the importance of fiscal proximity.
Approach towards contract
We wanted to ascertain the hypothesis that certain countries prefer legal based systems where others perfer a more hands-on approach.
Research Hypothesis 6: The preference of approach varies across countries. While some prefer it to be legal based, others have a preference for contract based systems.
Chi square value :2.802255543
Critical Value (probabilty 95%) : 3.841458821
Analysis : We reject the hypothesis, and based on results ascertain that there are no observed differences between North American and European countries when it comes to the approach towards contract.
Thus all the four hypothesis have been rejected.
Discussions
The results indicate that there is no observed difference between US and European clients’ attitude on the following matters when it comes to IT outsourcing decisions – language, cultural integration, fiscal proximity and cultural integration. The results run contrary to the popular notions and studies that have been observed in other studies of similar nature.
We then questioned the data sample and observed that the data was collected mainly with participants that the author had interacted with in school, or at work. Thus, while the sample represents a wide base in terms of geography and numbers, there is an inherent danger of the results being biased with the overall school, or company, philosophy. There is also a risk that online questionnaires cannot capture the complexity of such a topic, and more detailed personal surveys, with participants carefully chosen to remove the biases, could have served the cause better.
Having taken the above factors into account, we treat the results from this sample as inconclusive, and therefore decide not to proceed further with the results.
