MIS Quarterly Executive


"Financial Insurance Services Company" (FISC) (a pseudonym) is a major U.S. financial services company with thousands of representatives across the country. "Offsource" (a pseudonym) is a leading India-based company providing consulting and IT services to clients globally. This paper tells how their eight-year alliance has evolved. The relationship began as a simple pilot of offshore application development outsourcing, aimed at reducing development costs and supplementing in-house IT staff knowledge. It has evolved into a vastly more complex "cosourcing" model, where work is shared. To achieve cosourcing, the two firms had to resolve two major issues. The first was how to keep IT skills and knowledge from draining from FISC. This issue has been resolved by formally linking career development to project assignments and to outsourcer-to-client mentoring. The second issue is how to share work. It has been resolved by creating a dual project management hierarchy, where leadership at each level of a project can be either by FISC or Offsource, depending on the need. Their experiences provide five recommendations for others on structuring offshore outsourcing relationships: (1) understand where cosourcing is applicable, (2) define and develop the appropriate in-house IT competencies, (3) build trust but avoid building a binding relationship, (4) foster mutual understanding of ethnic and corporate cultures, and (5) map out a progression to cosourcing.