Global Offshore Outsourcing and the Indian IT/BPO Sector: Theoretical Perspectives

The main arguments in this chapter are as follows. For effectively managing human capital (HC) in the Indian IT/BPO sector, which typifies a business-to-business relational approach, one needs to accommodate both inward-looking and outward-looking approaches. Although transaction cost economics (TCE) can provide a good explanation for the initial motivation for organisations to offshore services to India, other aspects in an outsourcing relationship render the inclusion of additional theoretical lenses. This is coupled with high expectations of outsourcing firms when they offshore to the Indian BPO industry. However, it is not sufficient to explain why offshoring arrangements are sustained over the long term, as evidence here is scant. Similarly, while resource-based views (RBVs) and HC and operations management (OM) theories offer additional internal insights about the sources of, and strategies associated with, sustained performance levels required for IT/BPO business relationships, we argue that there is a need for understanding the phenomenon from an external perspective, as well as how organisations incorporate and pay specific attention to the dynamic requirements of its clients. We thus include market-based organisational learning theory for bringing balance into our analysis.