Client-vendor knowledge transfer in IS offshore outsourcing: insights from a survey of Indian software engineers

Abstract

We use knowledge-based theory to develop and test a model of client–vendor knowledge transfer at the level of the individual offshore information systems engineer. We define knowledge transfer in this context in terms of mechanisms by which an offshore engineer employed by a vendor can (a) gain understanding of their onshore client; and (b) utilize their knowledge for the benefit of the client. Over large geographic, cultural and institutional distances, effective knowledge transfer is difficult to achieve, although it is central to the success of many offshore outsourcing contracts. Our empirical test consists of a survey of vendor software engineers physically located in India but working on development projects for clients in Europe and the United States. The findings support predictions regarding engineer exposure to explicit and tacit knowledge: We find client–vendor knowledge transfer to the offshore vendor engineer to be positively associated with formal training and client embedment. We also test whether an offshore vendor engineer's inappropriate reliance on informal discussions in the offshore location hinders effective client–vendor knowledge transfer. Our result for this is mixed. Finally, we show differences between offshore engineers who have had previous onshore experience and those who have not. Client embedment is a potent driver of knowledge transfer when the offshore engineer has had previous onshore placement, while it acts to reduce inappropriate reliance on informal discussions for those that have not had an onshore placement.