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The purpose of this paper is to explore the underlying mechanisms through which integration capability and learning capability influence IT outsourcing performance from vendor’s perspective.

This paper develops a moderated mediation model to explain the underlying influence processes of integration capability and learning capability on vendor’s performance. A sample of 237 vendor firms was obtained from China through two separated surveys. The hypotheses were tested with the partial least squares method and bias-corrected bootstrapping method.

The empirical results indicate that external integration capability (EIC) mediates the effect of internal integration capability (IIC) on vendor outsourcing performance, and the relationship between EIC and vendor performance is positively moderated by learning capability, while learning capability has a negative moderating effect on the link between IIC and vendor performance. Further, the conditional indirect effect is suggested. The indirect effect of IIC on vendor performance through EIC becomes non-significant when learning capability is low.

This study highlights the counterintuitive notion that learning capability may not always have uniformly positive effects and figure out the mechanism through which integration capability and learning capability can effectively improve IT outsourcing performance.

Adaptation is often seen as a key competitive advantage for outsourcing vendors. Outsourcing research has often assumed that vendor capabilities are static. However, as a result of uncertainties and/or changes in the client environment, vendors need to be able to adapt their outsourcing capabilities. The aim of our research is to compare two contrasting outsourcing approaches and illustrate how an adaptive approach may deliver better results for clients in the long term.

The paper uses a combination of literature and case study research. A retrospective case study approach was adopted, using interviews, observations and analysis of reports. Two case studies utilizing contrasting clients approaches were investigated and compared. In one of the case studies, the client reorganized activities first and then outsourced them, while in the other, the client did the reverse – outsourced first and then reorganized.

The findings indicate that reorganizing first and outsourcing afterwards contributes to a more controlled implementation, which results in a more defined and stable set of vendor outsourcing capabilities that contributed to short-term success. In contrast, outsourcing first and reorganizing later demonstrates a less controlled redesign of the client’s organizational structure, which requires a malleable set of outsourcing capabilities to accommodate future change. The latter strategic manoeuver results in an extended adaptation period, as some capabilities need to be developed over time. However, it may improve success over time as subsequent changes in the client environment can be catered for in a better way.

Only two explorative case studies were performed, limiting confidence in the degree of generalization of the results. We plea for more research on the effect of context dependency as various contingencies may impact the adaptation of outsourcing capabilities; for example, the volatility of the client’s market or the stability of the technology concerned.

When a client applies a proactive manoeuver, reorganizing first and then applying outsourcing, the number of adaptive capabilities required of the outsourcing vendor is reduced, limiting the risk for the client in the short term. In the longer term, however, subsequent change requirements may be less well-accommodated.

Strategic manoeuvers within an outsourcing context have received limited attention in research. As far as we know, this is the first empirical research that investigates the benefits of vendors having adaptive capability.

To review the issues surrounding the outsourcing of payroll.

Literature review covering: the benefits of outsourcing payroll; duty of care from employer's perspective; how employers could maintain sufficient expertise and control to effectively oversee the outsourcing payroll processor; and essential tips to a successful outsourcing relationship.

Many employers are aware that payroll administration is very complex and tedious; therefore, it has become one of the most common outsourced functions. In addition, outsourcing payroll offers several benefits, such as avoiding internal revenue service (IRS) penalties, reducing costs, and enabling direct deposits. However, employers should keep in mind that outsourcing payroll is not the end of their responsibility regarding payroll related issues. The IRS makes clear that employers are the ultimate responsible party even though they outsource their payroll.

In order to succeed in outsourcing payroll, employers must select a right vendor, come up with a clear and straight‐forward contract, and maintain sufficient control and effective oversight of the outsourcing vendor. Fulfilling these key factors will guarantee that the payroll vendor will take care of their payroll needs for years to come. The payroll outsourcing vendor can be viewed as a long‐term partner. Therefore, it is essential for employers to maintain a positive relationship with the vendor. In other words, they need to develop a win‐win relationship with the outsourcing partner by following the seven important tips that are identified and discussed.

Illustrates the seven essential tips to a successful outsourcing relationship: identify a key staff liaison to the outsourced provider; let the outsource provider meet the staff; inform your staff of the outsource arrangement; view the outsource company as an extension of staff; communicate effectively; learn and take advantage of all services the outsourced provider offers; and be clear and realistic regarding expectations.

Information systems (IS) outsourcing has been viewed as an attractive option by many senior managers generally because of the belief that IS outsourcing vendors can achieve economies of scale and specialization because their only business is information processing. The challenge of implementing, operating and maintaining enterprise resource planning (ERP) systems and the outsourcing service offered by ERP vendors have made ERP outsourcing an attractive option for some organizations. However, although IS outsourcing is now a major industry, the outsourcing of ERP applications is still in its infancy. This paper explores ERP outsourcing in terms of the application service provider (ASP) approach where a third‐party vendor hosts, manages and maintains various data and ERP applications on behalf of different clients. Critical to the management of the ERP outsourcing relationship is the outsourcing contract, which, if improperly or incompletely written, can have significant negative implications for the outsourcing firm. Contracts that encourage vendor performance and discourage under‐performance are therefore clearly of interest to managers. Although many articles have appeared on outsourcing, the issue of incentive contracts for ERP outsourcing has not been adequately addressed by researchers, partly because of the infancy of this area. In this paper, an approach to analyze incentive schemes and structuring ERP outsourcing contracts for the mutual gain of the parties is presented.

While the phenomenon of R&D offshoring has become increasingly popular, scholars have mostly focused on R&D offshore outsourcing from the point of view of the client firms, who are often from an advanced country. By examining vendor firms, in this paper the authors shift the focus to the second party in the dyadic relationship of R&D offshore outsourcing. Specifically, the authors compare vendor firms with nonvendor firms from the same emerging economy and industry to look at whether vendor firms from emerging economies can improve their innovation performance by learning from their clients. The authors also look at the role of depth and breadth of existing technological capabilities of the vendor firm in its ability to improve its innovation performance.

This study is based on firm-level data from the Indian biopharmaceutical industry between 2005 and 2016. The authors use the Heckman two-stage model to control for self-selection by firms. The authors compare the innovation performance of vendor firms with nonvendor biopharmaceutical firms (group vs nongroup analysis) as well as innovation performance across vendor firms (within group comparison).

The authors find that, compared to nonvendor firms, R&D offshore outsourcing vendor firms from emerging economies have higher innovation performance. The authors argue that this higher innovation performance among vendor firms is due to learning from their clients. Among vendor firms, the authors find that the innovation gains are contingent upon the two factors of depth and breadth of the vendor firms' technological capabilities.

This paper makes three contributions: First, the authors augment the nascent stream of research on innovation from emerging economy firms. The authors introduce a new mechanism for emerging economy firms to learn and upgrade their capabilities. Second, the authors contribute to the literature on global value chains, by showing that vendor firms are able to learn from their clients and upgrade their capabilities. Third, by examining the innovation by vendor firms, the authors contribute to the R&D offshore outsourcing, which has largely focused on the client.

The study findings have important implications for both clients and vendors. For client firms, the authors provide evidence that knowledge spillovers do happen, and R&D offshore outsourcing can turn vendors into potential competitors. This research helps firms from emerging economies by showing that becoming vendors for R&D offshore outsourcing is a viable option to learn from foreign firms and improve innovation performance. Going outside geographic boundaries may be a large hurdle for these resource-strapped, emerging economy firms. Providing offshore outsourcing services for narrow slices of R&D activities may be a starting point for these firms to upgrade their capabilities.

This paper is among the first to quantitatively study the innovation performance of vendor firms from emerging economies. The authors also contribute to the nascent literature on innovation in emerging economy firms by showing that providing R&D offshore outsourcing services to client firms from advanced countries can improve firms' innovation performance.

This study aims to examine how the role of peripheral knowledge changes along with the perspectives of vendor and client in inter-organizational IT outsourcing. To this end, this study tests the effects of the peripheral knowledge of vendors and clients on IT outsourcing performance under three different combinations of performance-assessing views from both parties.

To contrast the effects of the peripheral knowledge of vendors and clients based on their views, this study collects matching data on 107 projects from both parties. The survey method is adopted to measure the peripheral knowledge levels of vendors and clients and IT outsourcing success. The associations between peripheral knowledge and IT outsourcing performance are then assessed when the views match, cross and agree to a certain level.

The peripheral knowledge of vendors plays a more significant role than that of clients in most IT outsourcing cases. Moreover, the agreement between the peripheral knowledge of vendors and clients shows a moderating effect only when the performance is assessed by clients than by vendors.

This study contrasts the peripheral knowledge of vendors and clients by altering performance-assessing views in IT outsourcing. This study also rationalizes why the peripheral knowledge of vendors is more important than that of clients, as well as explains whose perspective is more significant when the performance is assessed.

This paper aims to explain how small- and medium-sized firms (SMEs) create information technology (IT) business value through blended IT outsourcing (ITO). The explanatory framework it proposes enables SMEs to replicate IT capability outcomes (i.e. enhance their economic, strategic and technological competences, namely, ITO success) by endorsing an ITO strategy catalyzed by IT vendor integration.

This study uses covariance-based structural equation modeling to test the proposed research model. Data are collected from 251 knowledge-intensive business SMEs located in Science and Technology Parks in Spain.

The results demonstrate empirically that SMEs can replicate IT capability benefits (i.e. enhance their non-IT competences) through blended ITO in which IT, conceptualized as a transversal supporting activity, is outsourced to an IT vendor while the value creation process remains with the buyer. The integration (i.e. process integration and information sharing) of an IT-proficient vendor catalyzes ITO success. More specifically, the results show that, although process integration is not directly related to competence enhancement, fosters information sharing, which directly facilitates ITO success. The results also show that IT vendor proficiency accounts for ex ante trust.

Managers should think of transformational ITO as a strategy to enhance firm competences. For blended ITO strategies to succeed, managers must have a comprehensive understanding of the business they run, as it is important to create conditions that foster inter-firm information sharing. To achieve these conditions, managers should take special care in selecting boundary spanners, who are the pivotal links in competence enhancement.

While most research focuses on ongoing trust (i.e. trust develops as ITO evolves), this study focuses on initial (i.e. ex ante) trust and analyzes IT vendor proficiency (expert, experienced and reputed) to examine trust as an antecedent of ITO. This study also draws on previous conceptualizations of vendor integration to develop and analyze a two-step integration model to explain how IT vendor integration (i.e. process integration and information sharing) catalyzes enhancement of the buyer’s non-IT competences. This study focuses on SMEs, which are often neglected in ITO studies.

Managing attrition is a major challenge for outsourcing vendors. Literature on management control in offshore outsourcing is dominated by the formal approaches to control design, which do not adequately consider the influence of contextual factors. This article aims to adopt the lens of institutional theory, and use empirical data gathered from case studies in both the UK and India to improve the understanding of the institutional logics that shape the control of attrition.

This article draws on in‐depth qualitative research undertaken with directors and senior managers in client and vendor firms engaged in outsourcing relationships that span both corporate and national boundaries. Drawing on empirical data from the UK and India, the interplay between the management control of attrition and contextual factors is analysed, and the practices adopted to manage these contextual factors are also identified and discussed.

The analysis presents relevant aspects of the regulative, normative and cognitive institutions inhabited by vendor firms and the challenges such aspects present for managing attrition. The dynamics of institutions and control are discussed in the area of attrition, and the interplay between institutions and control is outlined. The regulative, normative and cognitive institutions inhabited by vendor firms contrast markedly to that of the client in relation to social and legal rules, norms and practices.

The paper develops a theoretical basis for linking control and context in offshore outsourcing, drawing on the work of Scott in institutional theory, and Friedland and Alford, in institutional logics. This paper offers an alternative conceptualisation of control in attrition based upon rationalistic modelling through institutional logics.

This paper offers key implications for research, in improving the understanding of contextual factors and management control in global outsourcing relationships. Both clients and vendors in offshore outsourcing need to be aware of the influence of contextual factors when managing attrition.

The interplay of institutional logics and implications on the control of attrition provides an interesting approach to understanding how firms manage attrition in offshore outsourcing.

Considering the limitation of the single stage vendor selection model, this paper proposes a two‐stage vendor selection framework for IT outsourcing in microfinance banks.

The paper attempts to realize a complete analysis at company level using grey systems theory for shaping the relations among variables. With the social choice function – Dodgson function, the first stage is a trial phase that helps the decision‐maker find the potential vendors, then, the decision‐maker employs those chosen vendors for the final selection with modified grey relational analysis (GRA) integrated analytic network process (ANP), which emphasizes the interrelation among those selection criteria, and avoids the subjective estimation of experts and practitioners. The case of a microfinance bank IT outsourcing vendor selection is used to verify the proposed approach.

The results of the empirical study show that the proposed method is practical for ranking competing vendors in terms of their overall performance with respect to multiple interdependence criteria for the bank's IT outsourcing.

The method exposed in the paper can be used for other supplier selection by modifying some criteria and weight.

The paper provides a method for ranking competing vendors in terms of their overall performance with respect to multiple interdependence criteria for IT outsourcing.

The purpose of this paper is to propose a strategic conflict analysis, based on the graph model for conflict resolution (GMCR), that is applied to information technology outsourcing (ITO) in a real-world software development and implementation process in Brazil.

Because the idea of this study is to answer “why” the ITO conflicts occur and “how” they can be avoided, the case study methodology was adopted. The software GMCR II was used to analyze the interactions between an IT vendor and an IT client.

The results suggest that a lack of relational governance is a critical issue that could be handled to improve the interaction between those involved.

The main results are restricted to the case study and cannot be generalized. Moreover, a specific limitation of this paper pertains to the use of the GMCR and the consequent difficulty for IT vendors and IT clients to work with a large number of actions and to set preferences for several states of conflict.

The strategic analysis of outsourcing conflicts provides a holistic view of the current situation that may assist the client and vendor in future decisions and identify guidelines to ensure successful ITO. Therefore, this paper provides an effective guide for clients and vendors to better manage conflicts and establish a contingency vision to avoid such disputes.

The ITO conflict is analyzed using the GMCR, considering both perspectives of the outsourcing process (vendors and clients).