Factors Influencing Performance of ITES Firms in India

Factors Influencing Performance of ITES Firms in India

Soni Agrawal (Department of Humanities and Social Sciences, Indian Institute of Technology - Kharagpur, Kharagpur, India), Kishor Goswami (Department of Humanities and Social Sciences, Indian Institute of Technology - Kharagpur, Kharagpur, India) and Bani Chatterjee (Department of Humanities and Social Sciences, Indian Institute of Technology - Kharagpur, Kharagpur, India)
Copyright: © 2012 |Pages: 19
DOI: 10.4018/irmj.2012100103
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Abstract

Firms from developed countries are increasingly offshore outsourcing services to developing countries to have cost as well competitive advantages. Although this is a growing practice, there has been limited empirical attention in understanding the outsourcing phenomenon, particularly from the perspective of service provider firms that execute important business processes for their overseas clients. Despite growing trends to outsource, only a few service provider firms report success. This puts the service provider firms under increasing pressure to add value and improve quality of relationship. They have to depend not only on tangible factors but some intangible factors also play an important role in their performance. In this paper, the authors try to find out factors that influence performance of service provider firms. Multiple regressions using four indicators of firm performance are carried out to see the influence of certain factors on information technology enabled service (ITES) firms’ performance.
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Factors Influencing Performance Of Ites Firms

Most of the earlier studies on outsourcing are based on resource based theory (RBT) of firms and talk about certain resources and organizational capabilities in determining firm performance (Barney, 1991; Teece, Pisano, & Shuen, 1997). Firms are viewed as integrated source of various types of resources and capabilities (tangible and intangible), which are linked to organizations (RBT). These are valuable, inimitable, rare or non-substitutable. By utilizing these resources, firms tend to capitalize environmental opportunities, neutralize threats, and are able to obtain competitive edge over rival firm. Thus, firms can gain the benefit of economies of scale, access to scarce knowledge, skills, innovation, etc. (Porter & Fuller, 1986). There are few unique and organization specific factors that motivate organizations to make outsourcing decisions. Researchers had also examined inter-relationship of various factors that determine success or failure of a firm (Gonzalez, Gasco, & Llopis, 2006).

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