Effects of culture on control mechanisms in offshore outsourced IT projects

Abstract

In spite of the increasing trend of offshore outsourcing in the IT industry, there has been little attention given to control strategies for managing offshore IT development. This paper offers an analysis of the relationship between national culture and control mechanisms, which is particularly important in the offshore systems development context. Control is defined as an attempt made by an organization to ensure that individuals act according to an agreed upon strategy to achieve desired objectives. This paper uses four modes of control that have been previously applied to information systems development - formal (outcome, behavior) and informal (clan, self) - in the offshore context. The dimensions of national culture studied are based on Hofstede's work and include individualism (vs. collectivism), uncertainty avoidance, and power distance. The objective of this research is to address the effect of national cultural differences on control mechanisms. Propositions regarding the relationship between cultural dimensions and modes of control used in offshore-outsourced ISD project are presented. This work draws from three distinct research streams - control, outsourcing, and culture. This work proposes portfolios of control that contain a mix of control mechanisms which should be implemented depending on the cultural settings involved.