Offshore outsourcing is undergoing rampant growth at an estimated rate of 20% to 25% annually with the trend being expected to continue into the future. The high rate at which offshore outsourcing is being incorporated by firms in various economic sectors arises from the resulting benefits. For example, through outsourcing, a firm is able to tap superior skills and also favorable prices (Khan, Pezeshki, Clear, Al-Kaabi, 2010, p.3).
The Information Technology (IT) sector is one of the sectors where this concept has been greatly adopted as a result of the numerous projects undertaken in the industry ( Sajeev & Ramingwong, 2008, p. 125). Many firms opt to have their software tested by Independent Test Group (ITG) which are in most cases outsourced from foreign countries (Khan, Pezeshki, Clear, Al-Kaabi, 2010, p.3).
Aundhe and Mathew (2009, p.418) are of the opinion that offshore outsourcing has become a prevalent practice globally amongst firms operating within the information technology industry. According to Wynn, Whitley and Myers (2002, p.380), offshore outsourcing is mostly undertaken by firms in developing countries. In the 21st century, a number of firms in the Gulf countries such as Saudi Arabia, Oman and the United Arabs Emirates have incorporated the concept of outsourcing.
Purpose of the study
The aim of this study is to explore how the risks involved in offshore outsourcing amongst firms within the IT sector in Saudi Arabia.
Despite the numerous economic benefits which firms can attain from offshore outsourcing, there are also a number of risks associated. The resultant effect is project failure leading to business loss (Stellaman &Greene, 2005, p.256). Some of these risks arise from the existence of differences with regard to comparative and competitive advantage between the countries involved (Ting-Toomey, 1999). According to Winkler, Dibbern and Heinz (2008, p.243), offshore outsourcing presents unique challenges which must be understood.
The research question will act as a guide in conducting the research. The core research question will be;
What are the main risks of offshore outsourcing in Saudi Arabia?
Reviewing the works of other people with regard to the topic under study enables the researcher to identify gaps left out by other scholars regarding the concept being evaluated (Blum, 2010). This enables the researcher to improve his or her study. This chapter will entail the identification and analysis of risk involved in offshore outsourcing. In order to get attain a comprehensive understanding of the risk; various types of offshore outsourcing risks will be evaluated. These include;
- Geographical risks
- Infrastructure risks
- Operational risk
- Project risk.
According to Kumar (2005, p.7), the effectiveness with which a research study is conducted is dependent on the method of study adopted. The chapter will give a comprehensive explanation of the procedure which will be used in conducting the study. The key components of the chapter will include research design, method of data collection, data coding, sampling and sample size, data analysis and ethical considerations. Limitations and assumptions made in the study will also be outlined.
This chapter will entail a comprehensive analysis of the findings of the study. This will be undertaken by analyzing the responses of the participants with regard to the research questions. Statistical data analysis tools will be used in analyzing the data.
A comprehensive discussion in relation to the key findings of the study will be conducted. This will entail identification of the major risks identified by the respondents.
Conclusion, recommendation and future research
A summary of the study results shall be provided as well as a number of recommendations on how to mitigate or eliminate the risks will be suggested. In addition, directions for future studies on the same area of study shall also be provided.
Aundhe, M.D. & Mathew, S. 2009. Risks in offshore IT outsourcing: a service provider perspective. European Management Journal. Vol. 27, pp. 418-428. Karnataka: Pai Management Institute.
Blum, D. 2010. Weigh risks of offshore outsourcing. Web.
Kumar, R. 2005. Research methodology: a step by step guide for beginners. New York: Sage.
Khan, T., Pezeshki, V., Clear, F. & Al-Kaabi, A. 2010. Diverse virtual social networks: implications for remote software testing teams. Brunel, UK: Brunel University.
Sajeev, A.S. & Ramingwong, S. 2008. Mum effect as an offshore outsourcing risk: a study of differences in perspective. The Computer Journal. Vol. 53, issue 1, pp. 120-126.
Stellman, A. & Greene, J. 2005. Applied software project management. California: O’Reilly Media Incorporation.
Ting-Toomey,S. 1999. Communication across cultures. New York: The Guilford Press.
Winkler, J., Dibbern, J. & Heinzl, A. 2008. The impact of cultural differences in offshore outsourcing: case study from German –Indian application development project. Journal of Information System. Vol. 10, issue 2, pp. 243-258.
Wynn, E., Whitley, E. & Myers, M. 2002. Global and organizational discourse about information technology. New York: Springer.