The Role of Coordinators in Software Off-Shoring: A Knowledge Management Perspective

Introduction

The globalization tendency and high tech era has led to the emergence of business partnering in high tech industries such as Pharmaceutical Biotechnology, Aerospace Technology, and IT. In particular since 1990s, high-tech industries have become dominant in R&D partnering, comparing with medium-tech industries¹ or low-tech industries². The high-tech partnerships enable organizations to learn from a variety of sources (partners), in a flexible setting of (temporary) alliances for various organization activities across the value chain³.

Offshoring refers to the process by which companies undertake some activities at offshore locations instead of in their countries of origin. Offshore outsourcing is one of the international business trends that have changed the way international businesses is being done in the world is in the areas of Multi Nation Cooperation (MNC), International joint ventures (IJVs), acquisition, mergers. Client companies can reduce development cost by sending part of work to an external party,.⁴ In addition, they can secure human resources, i.e., utilize highly skilled overseas human resource while concentrating on their core business. A service provider company can create jobs for labor, upgrade labor skills and approach advanced technology through many offshore project with clients in developed countries, which the provider company cannot obtain if they only focus on domestic development of software.

Figure 1.

Revenue of the top offshore destinations in 2010⁵

However, by transferring some work to an external party in a foreign country, software offshoring faces up with different challenges that are synthesized in the below table.