I need an explanation for this Communications question to help me study.
1. Select an article from the attached MIS Quarterly. Post a summary of the theory, research design, analysis, and
conclusions regarding the article you selected.
2.) Reply for below post.(50-100 words)
The major reason for the offshoring labor intensive information system services is the obtaining of economic benefit or advantage from the lower labor costs. The theory argued in this paper is that offshore outsourcing would involve several extra costs that would be incurred for the client organization which would account for offshore projects economic failure. The aim of the authors is disaggregating such extra expense into constituent parts as well as explaining why such parts differ between these offshored projects.
The research methodology is that of survey. There is a survey on numerous software projects. 6 offshored projects concerning software was done on German financial institutions. Also, there was a qualitative form of research that was involved to explain why there were extra costs incurred and to explain the logic behind the theory presented. The concepts presented in the research were done through qualitative means in analyzing the variations in the two theories presented by the author while considering the nature of the companies involve in the research.
Analysis was made as to why there is a high variation in the success of economy if the wage differences would be so high. Analysis was made on the transaction cost economics (TCE) framework to support the theory presented by the author. After the analysis of the offshored project in various companies, it was discovered that the there are four forms of activities in which clients incurred post-contractual extra costs – knowledge transfer, requirements design and specification,, coordination and control. In relation to the theories of KBV and TCE which are presented by the author, it was analyzed and found that the extra costs level on client would depend on the client-specific knowledge and the absorptive capacity of the vendor.
Even though many companies would claim to have a realization of the cost advantages by offshore sourcing of the IS services, the author suggests that the need for more differentiated and profound analysis of associated economic benefits of offshore outsourcing should be considered. While the savings on labor cost constitute to offshore outsourcing that would lead to savings on production cost, the findings made from this paper shows that additional forms of costs would arise when there is offshoring of software projects – this would offset the initial benefits of labor cost. Hence, even though companies would offshore projects, there should be keen on various benefits of cost saving as well as the consequences of applying their decisions based on such benefits.
Dibbern, J., Winkler, J., & Heinzl, A. (2008). Explaining Variations in Client Extra Costs between Software Projects Offshored to India. MIS Quarterly, 32(2), 333–366