1. CLIENTS’ INFLUENCE ON IT OUTSOURCING VENDORS’ OPERATIONAL CAPABILITIES: A RELATIONSHIP LEARNING PERSPECTIVE Authors: Ji-Ye Mao, Fang Su Reporter: Fang Su

2. Self-introduction  Education background  2011—present: doctoral candidate in Business School of RUC  2009—2011: studied in Business School of RUC and got an master degree  2003—2007: studied in Normal Capital University  Research fields:  IT outsourcing  Business Intelligence  E-mail: sf.830@163.com

3. Agenda  Research Topic  What’s New  Research Methodology  Theoretical Perspective  Data Analysis  Results  Contributions

4. Research Topic  Research topic  China-Japan IT Software Outsourcing  Vendor’s Perspective Vendor’s Capability Development  Research questions  How various relational activities between different clients and vendors affect the development of vendor capabilities  Why these relational activities could influence?

5. What’s New  ITO research mainstream  Objects: India-based outsourcing  Perspective: client  Content: why/ what/ how  This research  Objects: China- Japan outsourcing  Perspective: vendor  Content: capability development

6. What’s New  Vendors’ capability development  Internal mechanism e.g. Levina and Ross (2003); Jarvenpaa and Mao (2008); Su and Levina (2010), etc.  External influence(client) is also important  Especially in small vendor- large client relationship (Ngugi et al 2010)  We are intent to find how clients influence on vendors’ capability development? And Why.

7. Research Methodology  Case study  Multiple case study  Data source  2 vendors (Alpah and Beta)  4 vendor-client relationships Alpha-W, Alpha-X, Beta-Y, Beta-Z  Data analysis  Within case analysis  Between case comparation

8. Theoretical Perspective  Relationship Learning  a joint action between a vendor and a client to improve the efficiency and effectiveness of collaboration Information and knowledge sharing Joint sense-making Knowledge integration

9. Data Analysis Table 1 Profiles of Interviewees relationshipsIntervieweesTime of visitFirm Profile Alpha-W8 interviews with the President, director of development center, division heads, and project managers July 2007, July 2010, Jan. 2012., Feb. 2012 Founded in 1995, publicly listed in 2004. Headcounts over 3200 at the peak in 2007, down to about 3000 in 2012 Alpha-X10 interviews with the director of development center, division heads, and project managers Beta-Y8 interviews with the partners, division heads, and project managers July 2007, July 2010, Jan. 2012., Feb. 2012 Founded in 2001, with a headcount of over 300 at the peak in 2007, down to 90 afterward Beta-Z6 interviews with the partners, division heads, and project managers

10. Table 6 Summary of the Cases Alpha-WAlpha-XBeta-YBeta-Z Years of cooperation Ten yearsEight yearsTen yearsNine years Share of vendor’s total business 40%10%30%20% Client typeMature software outsourcer Supplier of solutions with relatively low IT maturity End userMature software outsourcer Project typeLong-term, high sustainable Short-term, not sustainable Long-term, sustainable Short-term, not sustainable Data Analysis

11. Table 6 Summary of the Cases Alpha-WAlpha-XBeta-YBeta-Z Intent of outsourcing To obtain tactical support To improve operational efficiency Relationship between top management Very GoodExisted, but so-soNone Information and knowledge sharing Technical, Domain and Managerial knowledge provided by the client Knowledge provided by vendor Technical knowledge provided by the client Domain knowledge provided by the client Knowledge provided by the vendor Technical knowledge provided by the client Joint sense- making Dialogues at task level Senior management level Dialogues at task level Senior management level Communications at task level only Integrating knowledge At task level At firm level At task level At firm level Client-specific capabilities High, upstream tasks for some projects Low, detailed design, and coding and unit testing only High, upstream tasks for some projects Low, detailed design, coding and unit testing only Process capabilities Standardized development process; A high level of large project management Idiosyncratic process of development; Management of small projects Idiosyncratic process of development; Management of small projects Strict process of development and high quality assurance

12. Results  Clients’ outsourcing intent and vendors’ operational capability  Compared to clients aiming for operating efficiency, clients seeking tactical support play a more important role in fostering outsourcing vendors’ client-specific capabilities and process capabilities. Willing to share business knowledge and industry background Willing to solve operational problems together

13. Results  Clients’ project management level and vendors’ process capability  Clients with higher project management expertise contribute more to the vendors’ development of process capabilities  by sharing more technical knowledge, and placing more emphasis on quality enhancement activities.

14. Results  Clients’ outsourcing projects and vendors’ client-specific capability  Clients that outsource projects with higher sustainability and a longer life cycle foster stronger client-specific capabilities in the vendor  by sharing more business knowledge and engaging in more times of joint sense-making.

15. Contributions  Firstly, we find the clients influence on vendors’ capability development  Secondly, we explain the influence mechanism

16. Gains in the Summer Camp  Business Intelligence (BI)  BI is a concept which refers to a managerial philosophy and a tool that is used in order to help organisations to manage and refine information  to make more effective business decisions  Dynamic Capability  Sense opportunities  Seize opportunities  Managing threats/ transforming Continuous alignment and realignment of specific tangible and intangible assets

17. Gains in the Summer Camp  How BI improve firm performance?  Case study or Survey BI Dynamic Capbilities Sensing Seizing Managing Firm Performance

18. Comments & Questions

19. Thank You