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Authors: Ellen Swanson Marie Thorsson Supervisor: Niklas Åkerman Examiner: Richard Owusu Date: 2015-05-27
Subject: Business Administration
Communication is the key
Abstract
This thesis aims to describe and analyse how companies establish and maintain relationship quality when outsourcing offshore. In literature we have identified that companies who outsource offshore encounter difficulties with quality and costs. However most of the contracts are renewed even though they encounter these issues. The reason is because
relationships are valued higher. In order to create a long-term successful offshore outsourcing, it is of essence for companies to have guidance in how to establish and maintain an effective and fruitful client-vendor relationship.
The identified research research gap we will address in this thesis is the is a lack of research on how to establish and maintain relationship quality in an offshore outsourcing relationship, in terms of exploring the topic from both the client and the vendor perspective.
In the literature review theories and previous research on offshore outsourcing overall is presented, as well as explains what successful and unsuccessful is. The literature review elaborates on relationship quality and social exchange theory in relation to offshore
outsourcing. Furthermore, it goes into detail of the variables that are of the utmost interest to create relationship quality. These variables are trust, commitment and satisfaction.
In this study both the client’s and the vendor's perspective is illustrated and compared. This was possible by conducting qualitative interviews with both client and vendor. The
interviewees all had several years experience of working with outsourcing to or from India. The empirical finding from these interviews were analysed with help from the theoretical framework. However during the interviews we identified that communication is significantly important when establishing and maintaining relationship. To achieve success in an offshore outsourcing project the communication between the client and the vendor should be
trustworthy, transparent, honest and clear, also conflicts should be solved through this type of communication.
Acknowledgement
We would like to thank everyone whom has contributed with knowledge, information, comments and feedback along the way.
Firstly, we want to thank our interviewees for their participation and putting their time aside, in order to share with us their knowledge, experience and expertise. We were positively surprised by your involvement and dedication. You have been the building block for this thesis and without you we would not have been able to perform this study. We are truly thankful to you Håkan Swanson, Rajesh Srinivas, Fredrik Ahlström, Sameer Deolalikar, Pär-Olof Olsson and Pavel Siddique.
Furthermore, we would like to thank our tutor PhD Niklas Åkerman, our examiner Dr. Richard Owusu as well as our opponents for their insightful comments, discussions and guidance along the way in this process.
Kalmar, 27 May 2015
6.2!Implications!and!recommendations!...!59!
6.2.1!Theoretical!implications!...!59!
6.2.2!Practical!recommendation!...!59!
6.3!Suggestion!for!future!research!...!60!
1. Introduction
The following chapter aims at first define and position the topic of offshore outsourcing in a global perspective as well as outline its history. Thereafter we will discuss current
problematic issues of offshore outsourcing leading up to the problem definition of how to handle a client-vendor relationship in a global business area. We will subsequently present our research purpose and finally state the delimitations of our study.
1.1 Background
The perfect global setting is, according to Lasserre (2012), when there is a free flow of goods, data and money between countries. The battlefield for competition is the world, where
operations of companies worldwide are integrated and coordinated. Today the
competitiveness is strongly impacted by companies’ global activities due to the increased globalization (Jaehne, 2009). This has resulted in a shift of the production patterns and the global trend shows an increasing demand for flexible manufacturing and highly reliable logistic systems’ (McFarlin & Sweeney, 2015). In order to adapt, companies have started to offshore and outsource activities.
Outsourcing is defined as a company’s decision to move a business process from inside the company to a service provider outside the company (Click & Duening, 2005). The reason is mainly to enable the company to focus on core competences internally, while having
commodity processes performed externally. Offshoring, on the other hand, is when the company relocates one or several parts of their value chain to a foreign country, such as jobs and processes (Zhou & Zeng, 2013). Meaning, offshore outsourcing is when a company decides to relocate part of their value chain activities to a service provider located in another country (Manning et al 2011; Oshri et al., 2009; Winkler et al. 2008). In this thesis the company that outsource activities offshore will be referred to as the client, while the service provider will be referred to as the vendor.
European countries, which shows that overall offshore outsourcing of services is increasing with between 27-42% depending on what country you look at. The growth trend differs for different activities, with the highest predicted growth in production and development, followed by: infrastructure and data centre services, sales, design and engineering, and procurement.
The activities companies first started to outsource offshore were standardized, repetitive, labour-intensive and did not require close contact with the customers or specific knowledge on the subject (De Bruyn & Ramioul, 2006). Companies saw the prospect of reducing costs, making a larger profit and gaining a competitive advantage, encouraging causes for
companies to outsource offshore (Steinfeld, 2015). The next step in offshore outsourcing was for companies to move service and back-office activities to emerging markets (Helyar, 2012). India was especially popular, not only because of the low wages, but also because Indian vendors were known to have staff who spoke English, had sufficient knowledge in technology for data-processing and were able to give computer support.
Today high-value work is being outsourced offshored to (Brown & Fersht, 2014). Three out of ten companies are planning to offshore outsource parts of their accounting and finance in the next year. Furthermore, Brown and Fersht (2014) have identified a future trend to be offshoring of activities demanding more contexts and an increased ability to adapt to a specific company’s requirements. This trend would lead to outsourcing of activities that require skills in accounting, procurements, research and financial analysis (Helyar, 2012). According to Brown and Fersht (2014) clients find that the purpose of offshore outsourcing is no longer only to reduce costs, but also to increase efficiency. As the purpose has evolved, these high-value activities have begun to require that the vendor have a higher understanding of the business context, as well as a more frequent and interactive relationship with the client (Helyar, 2012).
point of stability has been reached in a relationship the company sees a value in it. Therefor it is an objective to develop a sustainable relationship built on trust. Consequently, efficient offshore outsourcing relationships is positively related to contract renewal.
Relationships are considered to be the foundation of business (Ford & Håkansson, 2011). Relationships offer the possibility of savings on time and cost. It is also an opportunity to develop new products and services. However, developing a relationship takes time. Both parties need to invest resources to maintain the relationship, otherwise problems might occur. When doing business with other companies there might be difficulties in cooperation and communication due to different intentions and objectives. To assess how well the needs and expectations of the relationship are met, the relationship marketing literature uses the term relationship quality. Relationship quality strongly depends on the behaviour of the people involved in the interaction, expectations for the future as well as process-related and attitudinal variables. There are various opinions regarding the conceptualization of
relationship quality. Crosby et al. (1990) and Dwyer et al. (1987) consider the concept to be constructed in a multidimensional manner with the variables of trust, opportunism,
commitment, satisfaction and ethical profiles. The three variable trust, commitment and satisfaction evolve during the relationship and are interrelated. They are also the most popular variables used in conceptualization of relationship quality according to Athanasopoulou (2009), Skarmeas et al. (2008), Vieira (2008) and Crosby et al. (1990). Adding the
international aspect to the relationship, it will become even more complex (Akrout, 2014). In exchange across borders trust, commitment and satisfaction are especially important because the negative association between organizational performance and inter-firm opportunism are mediated through these variables.
1.2 Problem discussion
1.2.1 The managerial knowledge gap
Aron and Singh (2005) have found that companies in general believe offshoring of business processes to be easy, although this is not the case. They argue there are three mistakes that are easily made. Firstly, the companies focus more on what country and vendor to use rather than what processes are the most appropriate and profitable to offshore. Secondly, all risks are not taken into account. It is an imminent risk that when the process is transferred the vendor will increase the price since it is aware that it possesses the upper hand because the process cannot be reabsorbed on a short notice. Thirdly, all the different options that are available are not considered due to a too narrow analysis, only focusing on costs and do not bear in mind the interdependency towards the vendors.
Manning et al. (2011) consider the initial reason for companies to outsource offshore is to cut down on cost. However, it was a harsh reality for many companies since it was only a short term price advantage; it proved to be a challenge to control and monitor the performance, and this subsequently created extra costs that had not been calculated for in. Manning et al. (2011) state that most collaborations do not live up to the expected quality and cost savings, in spite of this as many as 70% of offshore outsourcing contracts are renewed at their expiration date. Long lasting relationships are strategically more important and valued higher than the lack of reached expectations. The reason is client specific investment; client involvement and high frequency of client interaction are all positively related to the renewal rate of offshore outsourcing contracts. In contrast, detailed contracts and knowledge intensive services are negatively related to deal renewal. This means that rather than focusing on detailed contracts one should focus resources on building strong relationships through frequent interactions and involvement in the process on a day-to-day basis. By creating sustainable relations and trust companies know that both parties are committed for the long-term and issues can be discussed and solved with time. Even though cooperation fails to meet the expected goal deals are renewed if the relationship has reached a point where trust is built and the parties are committed to the cooperation.
than the deal alone. The client tends to enter the deal with the idea of what can be gained, instead of realistic perspective of what will work for both sides, which is of importance in order to survive in the long-term. Because offshoring relations by definition are between a client and a vendor in different countries, it is more complex than a domestic relationship and therefore adaptations are needed in a greater extent (Clampit et al., 2015).
Cavusgil et al. (2013) argue that the importance of creating trust and long-term relationship is commonly known by managers today, however it is important to have cross-cultural
differences in mind. The world is getting more globalized and companies have to act on a global scale and interact internationally with partners in other countries and with other cultural norms. It is of importance to know about these differences in order to minimize misunderstandings and conflicts due to different cultural mind-set. Winkler et al. (2008) state that cultural misunderstandings and communication is the cause for many offshore
outsourcing projects failing to reach the expectation. You need knowledge of the vendors’ cultural traits in order to adapt and balance the leadership thereafter to minimize the cultural misunderstandings. Important factors for measuring quality in a relationship are, according to Winkler et al. (2008), trust, vendor performance, cooperation and conflict. Trust, vendor performance and cooperation have a positive influence on the relationship, while conflict has a negative effect.
1.2.2 The scientific knowledge gap
Relationships have been identified as a significant factor for success in an offshore
outsourcing project (Winkler et al., 2008; Goles 2001; Lee & Kim 1999; Grover al. 1996). John et al. (2014) and Lacity et al. (2009) have found the client-vendor relationship to be an issue and it has been so for the last 20 years. Moreover, several studies state that there is a need for more research on the relationship aspects of offshore outsourcing (John et al., 2014; Mao et al, 2008; Mirani, 2007; Kirsch, 2004; Choudhury & Sabherwahl, 2003). Despite this, the research on the subject has mainly focused on the aspect of transaction costs (Ikerionwu et al., 2014; Manning et al., 2011). Consequently, the client-vendor relationship quality needs to be studied further, in order for companies to prevent the high costs associated with
Manning et al. (2011) investigated what factors that create stable and long-term relationship with offshore vendors and how contract renewal is positively affected by relationship with vendors. They argue that previous research has been focused on companies’ relationships from a cost perspective, because the switching cost are too high. The explanation for why the relationships continue. However, Manning et al. (2011) conducted a quantitative study that showed relationships to be more important than an entirely correct result. Arguing that relationships are valued as having long-term strategic importance for firms. Client specific investment and client involvement are positively correlated to deal renewal and sustainable relationships.
There has also been a study done on German companies outsourcing to India carried out by Winkler et al. (2008). The study examines the client-vendor relation with cultural differences as the central aspect. The study has shown that cultural differences in power distance,
information system designer values and activity/passivity do influence behaviour. This has a negative impact on the relationship quality and the success of the offshore outsourcing project. To overcome the behavioural differences Winkler et al. (2008) recommend an effective management technique consisting of clearly defined roles and mechanism, strong leadership and active culture management.
We have also identified that there is a lock of qualitative studies on client-vendor relations. John et al. (2014) and Manning et al. (2011) have conducted quantitative research. The Structured Literature Review, SLR, approach has also been used in former studies about the trust aspect in client-vendor relations (Niazi et al., 2013). Moreover, most previous research on relationships in offshore outsourcing has been from the American perspective (such as John et al., 2014; Rottman & Lacity 2004; Kaiser & Hawk 2004; Heeks et al. 2001;
Nicholson & Sahay 2001). The number of studies on offshore outsourcing when the client is from a European country is less and there is especially a lack of studies that investigate how Swedish companies are working with the client-vendor relationship.
and a vendor perspective when European clients is establishing and maintaining offshore outsource relations with Indian vendors.
1.3 Problem definition
The scientific-gap is that no research could be found that study how companies establish and maintain client-vendor relationships practically using focus on trust, commitment and
satisfaction. To enhance the possibility for long-term successful offshore outsourcing it is of essence for companies to have guidance in how to establish and maintain an effective and fruitful client-vendor relationship. We consequently recognize that this research is important in order for companies to develop an offshore outsourcing strategy for their client-vendor relationship. The companies need to know what to do and what not to do. Additionally, there is also a gap in the research done from both the client and vendor perspective, especially with focus on relationship. Therefore, there is a need for further research about this subject. This has led us to focus this thesis on the research question:
“How is relationship quality established and maintained in a client-vendor relationship when outsourcing offshore?”
1.4 Purpose
The purpose of this thesis is to create an understanding of how companies achieve relationship quality when outsourcing offshore, by examining what variables are of importance when establishing and maintaining offshore outsourcing relationships. Furthermore, factors for offshore outsourcing being successful and unsuccessful will be explored, in order to identify the perceived importance of different variables in a successful relationship. Since relationships have at least two sides it is of importance to understand both of these. Therefore, this issue will be approach by empirical case studies of both client and vendor to enable a comparison of their perspectives.
1.5 Delimitation
2. Literature review
This chapter will present the theoretical framework for this thesis. The framework emerged from a literature review with relation to offshore outsourcing and relationship quality. The chapter will begin by defining offshore outsourcing and relationship quality. Followed by an elaboration of three essential variables to achieve relationship quality: trust, commitment and satisfaction. Lastly the conceptual framework for this thesis will be presented.
2.1 Offshore Outsourcing
Oshri et al. (2009) define offshoring as relocation of one or several of a company's activities to a foreign country either to a service provider or a wholly owned subsidiary. Outsourcing is contracting a third-party to be responsible for the management and completion of a project within a period of time, to a certain cost and with a specified service level. Consequently, offshore outsourcing is when an activity is contracted to a foreign third-party vendor. Hence, offshore outsourcing is when the vendor of an outsourcing service is from another country then the client who decides to outsource (Rajkumar & Mani, 2001).
Offshore outsourcing is considered the most challenging way to outsource, but also the most rewarding (Oshri et al., 2009). One benefit with offshore outsourcing is cost savings obtained from relocating business activities to emerging markets with low-wages and tax advantages. Other benefits are such as less overhead costs and access to unique expertise. It also results in the client having more resources available to focus on their core competences. Weerakkody and Irani (2010) have found that previously outsourcing have mainly been explained with adapted conceptual framework such as the transaction cost theory, TCT, created by
Williamson (1975) and Pfeffer’s political model (1978). The resource based view have also been used by Barney (2001); Mahoney (2001) and Peng (2001) to find out the reasoning behind why companies outsource and the competitive advantages that can be gained from strategic planning.
such as the transaction cost theory, TCT, created by Williamson (1975). The involvement of the partners is purely focused on the contract and rules (Kedia & Lahiri, 2007). The second generation, strategic partnership, is when the objective has shifted from cost reduction to achieving value enhancement. Offshore outsourcing is used to improve competence and be competitive. Value is created through extensive integration in order to building a long-term relationship. The third generation, transformational partnership, is the objective to redefine existing business. The partnerships often take the form of an alliance where the risks are shared and the expected advantages are increased business transformation and flexibility. When a company is in an early stage of offshore outsourcing the contract is highly specified and the implementation monitored, because the main objective is to save costs (Soderberg, 2013; Fizgerald & Willcocks). In the next stage, the mature stage, the importance of the client-vendor relationship increases and the perspective is the long-term potential, since the partnership now offers the client new business or capabilities.
The disadvantages with offshore outsourcing are the many risks. Oshri et al. (2009) consider the essential risks to be high dependence on an external organization and the company might lose skills that are useful in the future. Additionally, Ernst & Young (2013) have found that the biggest challenge when outsource offshore is for the vendor to understand the knowledge that the client provides for the process.
To assess the success of an offshore outsourcing project the variables taken under
consideration are cost, quality, risk and timeliness (Oshri et al., 2009). A successful project is when the strategic, financial, relational and technical objectives are accomplished (John et al., 2014). Another aspect that determines success is human/social factors (Click & Dunning, 2005). Factors such as: having several teams that can manage the offshore outsourcing process through all of the lifecycle, teach employees a different way of doing business, create a reassignment strategy and have a somewhat understanding of cultural differences.
Barrar and Gervais (2006) further emphasise some critical factors for success in outsourcing. In order to reach desired benefits one should focus on a shared vision, a clear strategy and a continual management of the relationship. Barrar and Gervais (2006) argue that if you do not have clear goals and objectives or lack a high level of trust there will be difficulties in
creating a shared vision and a commitment. To prevent this there are actions to be taken such as having regular meeting, openly give feedback and combine cultural values (Barrar & Gervais, 2006). The client’s and the vendor’s separate corporate cultures compatibility will affect their way of jointly achieve goals and handle problems along the way.
2.2 Relationship quality
Relationship quality is important for a long-term relationship. Akrout (2014), Skarmeas et al. (2008) and Ural (2009) state that relationship quality positively affects both development and maintenance of the relationship between client and vendor. Akrout (2014) has found that the definition of relationship quality is similar but not the same in all literature. Although many authors agree: relationship quality is an assessment of how a partner's needs and expectations are being meet in a relationship. Athanasopoulou (2009) describe useful variables to analyse when assessing relationship quality are cooperation, conflict, adaptation, opportunism, atmosphere, power and bonds that are social and/or structural. The most popular assessment variables are trust, commitment and satisfaction (Akrout, 2014; Athanasopoulou 2009; Skarmeas et al. 2008; Vieira et al. 2008; Crosby et al. 1990).
joint problem solving a suitable technique, because the solution is usually mutually
satisfactory. Joint problem solving is when the partners know how to take the other partner's perspective and have the ability to reconcile differences. Narayanan et al. (2014) also argue problems can be solved through effective integration. Further Akrout (2014) state that conflict resolution is facilitated through increased information exchange between the partners.
John et al. (2014) argue that the Social Exchange Theory (SET) framework can be used to examine and identify success factors for the client-vendor relationship. Lambe et al. (2001) define the Social Exchange Theory, SET, as a theory in social behaviour. It is based on the assumption that relationships are entered and maintained in order for the company to achieve a reward from it. The SET framework emphasises that exchange between partners relies on relational contracts or norms. When it is difficult for the partners to in a formal written
contract spell out critical terms, the relational contract can be used and with time the contracts usually become more relational and duties less codified. To attain a high level of flexibility in a complex exchange and when some circumstances are unforeseeable, the relational exchange is of essence. The exchange requirements characterized such as joint planning, high-level of cooperation and mutual adaption for needs. The success of the relational exchange and its functionality is determined by the relationship between the partners. A relationship built on trust and commitment can substitute formalities such as contracts.
The initial interracial transactions highly influence if the relationship expand, weaken, stay the same or dissolve (Lambe et al, 2001). Economic and social outcomes are measures used to evaluate a relationship. Additionally, a comparison is made with the accepted level of
performance and benefit provided, this in abstract to what another partner would be able to offer. The foundation of a relationship is mainly the outcomes from interaction and other forms of exchange. If both parties have a mutual positive experience of the exchange outcomes, the interdependence and commitment from each partner to relationship will improve. Consequently, partner interactions lead to development of norms and trust.
Lambe et al. (2001) has from extensive empirical research identified a number of variables for success. The selection of variables was made based on their representativeness in the
satisfaction to be among the most commonly used characteristics. These three SET
characteristics are the same ones as the variables to achieve relationship quality. Therefore, this thesis will develop exclusively on these three variables.
2.2.1 Trust
A business relationship is built on the trust one actor has for the other actor (Ford et al., 2011). Rotter (1980) define trust as “a generalized expectancy held by an individual that the
word, promise, or statement of another individual can be relied on.” Another definition by
Mayer et al. (2007) is that trust is “the willingness to be vulnerable to another party”. Even though researchers across different disciplines have varying definitions of trust, Oza et al. (2006) have identified two highly important factors; risk in terms of willingness to be vulnerable and positive expectations.
Trust plays an important role in the establishment of a supplier relation (Richardson et al., 2012). It is according to Oza et al. (2006) a key factor to increase the possibility for a successful outsourcing project. A gradual trust development is crucial for a long-term
partnership, instead of just a simple commitment. Trust is positively affected by openness and transparency. Also, trust is important because it is said to lead to high-quality
decision-making, as well as increased open communication, cooperation, risk-taking and satisfaction in the process of decision-making. Mayer et al. (2007) have found trust to reduce risk and
uncertainty, so a high level of trust results in increased risk-taking.
However, trust is regarded to be highly fragile in offshore outsourcing relationships (Oza et al., 2006). Mayer et al. (2007) consider control systems to have a negative impact on the development of trust. Further, Richardson et al. (2012) explain that trust is negatively
impacted by the social factor of fear. The fear emerges due to lack of communication. A lack of communication leads to a “them and us”- view, which further enhances the fear.
Additionally, cultural differences increase both mistrust and fear. Trust is highly impacted by interaction and the configuration of communication. The distance between the partners in an offshore outsourcing partnership results in little or no face-to-face communication,
consequently establishment of trust is difficult.
while in order to maintain trust additional variables are “communication strategies, contract
conformance, and timely delivery are vital factors in maintaining that trust” (Babar et al., 2007:1438). Manning et al. (2011) mention that when two parties have trust in one another
you know the other party is less likely to engage in greedy behaviour and this is important for long-term relationship. Further Barrar and Gervais (2006) argue that any partner is more likely to tell the truth during problem discussion if there is trust.
Trust is developed over time and in different steps, that is demonstrated in Lewicki and Bunkers (1995) trust model (Coakes, 2003). There are three different types of trust connected to the steps; deterrence-based, knowledge-based and identification-based (Coakes, 2003; Lewicki and Bunkers, 1998). Deterrence-based trust, the first step, is when the partner performs in accordance with the agreement because of fear for punishment in terms of a cancelled contract if not. Knowledge-based trust, the second step, is that information has been obtained during time of the relationship making it possible for one to predict the other
partner's behaviour. Identification-based trust, the third step, is empathy for the other partner's desires and common values regarding the intentions. In order to access as many benefits of trust as possible and establish a long-term relationship, the identification-based trust needs to be achieved.
2.2.2 Commitment
Chou et al. (2015) describe commitment as something lasting over time and in the context of business process outsourcing (BPO) it is a “forward looking” measure. To achieve the beneficial objectives of an outsourcing relationship commitment is a sufficient condition and a necessity. The success of a BPO project is highly influenced the client’s and the service provider's commitment. In order to achieve success there needs to be a strong commitment in terms of interfirm resources and interaction. The commitment is affected by the value gained from the outsourcing relationship. The value is characterized as knowledge-based value, process-based capabilities and governance. Commitment can be seen as an assessment of the client’s willingness towards developing and maintaining a long-term vendor relationship. If there is a lack of commitment the costs for the client tends to increase. Chou et al. (2015) have found that the commitment increases when there is an established knowledge supply chain between the client and service provider, consisting of knowledge sharing and
integration. Furthermore, commitment is dependent on how efficient an outsourced task is executed. Chou et al. (2015) consider the meaningful background for commitment to be the client’s absorptive capacity and behaviour control, as well as the service providers’ process alignment, task-knowledge coordination and process flexibility. Goo et al. (2008) explain that a commitment can be made in different various ways. One way is to sign a contract regarding the agreement of the outsourced activity, another way is to make a commitment through interaction.
Barrar and Gervais (2006) further argue that in outsourcing one should view the commitment as a shared vision and when challenges arise there has to be a partnership mentality.
Commitment is demonstrated by working as a team for a shared vision rather than looking at the contract to solve problems. It is of essence to work as a team when solving problems and to brainstorm for the best solution rather than work individually and blame one another. Further, Fraizer (1983) argue that when the expected rewards are high the firm will set the goals higher, this results in increased motivation and commitment to make the relationship successful.
differences as well as how to deal with them. It can also be sufficient to develop a customized strategy. Barrar and Gervais (2006) argue that this generate an understanding and experience that is useful for solving future problems.
2.2.3 Satisfaction
Akrout (2014) consider satisfaction to be a process of evaluating both the transactional and relational impacts. Lambe et al (2001) define satisfaction in business-to-business relationships as a measurement of how both partners perceive the performance and outcomes of the
relationship. Shirish and Thompson (2012) explain that performance variables at multiple levels need to be analysed, such as organizational cost structures and innovations, as well as firm survival and cost performance. Akrout (2014) argue that satisfaction is crucial in the first phase of the relationship where the client easily can break of the relationship, before
dependency arisen. In this first phase satisfaction is mostly transactional, it is perceived from reputation. Where as later on the client focus more on the flexibility and the quality offered by the vendor. Further Akrout (2014) argue that ones the relationship has become long-term oriented and trust has been created, the resolution to conflicts and dissatisfactions are likely to be solved easily as they emerge. When both sides are satisfied the trust is increased and the relationship quality.
Satisfaction tends to be transitory focused because it is a backward evaluation by the client of the vendor (Chou, 2015).
2.3 Conceptual framework
The literature review has shown that there are three main variables that have an impact on the relationship quality in offshore outsourcing. The first variable is trust. Trust has to be both establish and maintained in order to achieve relationship quality. The secondly variable is commitment. Commitment in terms of agreements and interaction, high commitment results in relationship quality. The third variable is satisfaction. A number of measurements and requirements need to be fulfilled to obtain satisfaction, if they are it has a positive impact on the relationship quality.
Figure 2.1: Conceptual framework. Created by the authors of this thesis
The figure 2.1 shows the three of variables; trust, commitment and satisfaction impact on relationship found in the literature review to have the greatest impact on relationship quality.
Relationship Quality Commitment
3. Methodology
The following chapter will provide the reader with the methodological framework the authors have used to conduct the study. We will provide argumentation for our choice of research approach, research method and design. Followed by an outline of the data collection, operationalization, method of data analysis and lastly a discussion of the research quality.
3.1 Approach
The research approach is the approach towards the link between theory and empirical research (Bryman & Bell, 2011). It clarifie how the theoretical framework can be related to the
research. The two most acknowledge forms of research approach are the inductive and deductive. There is also a third form, the abductive approach. The abductive approach is a combination of the inductive and deductive approach (Saunders et al., 2012).
The abductive approach was used in this thesis, because this approach allowed us to move back and forth between theories and collected data (Dubois & Gadde, 2002). The abductive approach is the most suitable approach to achieve the aim set out - create an understanding of how a long-term sufficient offshore outsourcing relationship can be developed and
maintained. It allows the authors to discover new things (Dubois & Gadde, 2002). It also enables to gradually evolve the theories in accordance to what is found when gathering the empirical material.
The inductive and deductive approach is not appropriate for this thesis, since these approaches have a research process with more restricting rules and less depth (Alvesson & Sköldberg, 2009). The induction approach is used to describe how a situation is perceived by the research objectives (Bryman & Bell, 2011). It is a common approach for qualitative study where empirical data is collected in order to get a greater understanding of a problem's nature (Saunders et al., 2012). The data is analysed to discover a pattern so it is possible to form a theory or conceptual framework that explain the link between cause and effect of different variables. To enable the authors to do a literature review and learn more about the subject of offshore outsourcing before the interviews, this approach was rejected.
this approach, the researcher use what is recognized about a topic and the theoretical
framework related to the topic to create a hypothesis (Bryman & Bell, 2011). The conclusion is a result of the connection between collected data and the hypothesis, are all the premises true then the conclusion is true (Saunders et al., 2012). This thesis is based on the hypothesis that relationship quality has an impact on the success of offshore outsourcing project,
however the main focus is on how relationship quality is created. The deduction approach is not applied because then it would not be possible to add theoretical material about
information that is mentioned first during the interview.
3.2 Research method
The common distinction of quantitative and qualitative research is by the way you collect the data (Saunders et al., 2012). The quantitative method is often referred to as numeric data collection based on questionnaire or statistics. It seeks to measure to what extent a
phenomenon occurs or set up different variables to examine the relationship between them. Meanwhile the qualitative method is associated with interviews and non-numeric data collection as well as understanding an issue (Bryman & Bell, 2011).
Qualitative research seeks to get a deeper understanding and find a reason behind a phenomenon, further the qualitative research emphasizes words and individuals’
interpretation of the reality in the collection and analysis (Bryman & Bell, 2011). In order to answer our research question “How is relationship quality establish and maintain in a
client-vendor relationship when outsourcing offshore?” it is of great importance to get an in depth
3.3 Research design
Research design is the plan to make a logical connection between the research question and the evidence that will be collected, analysed and interpreted (Yin, 2014). The research design in this thesis is going to be used as a framework for data collection and analysis, which is in accordance with Bryman and Bell (2011) signification. To collect the appropriate empirical evidence for a qualitative study and to find an answer to the research question, certain research designs are more appropriate and suitable than others. In regards to research design Bryman and Bell (2011) state that there are five different designs to choose from: case study,
experimental, cross-sectional, longitudinal and comparative design.
This thesis is examining a “how” phenomena through a qualitative research method;
therefore, according to Yin (2014) the case study research design is the most appropriate. This because a case study research design helps to grasp a real-world phenomenon and the
contextual conditions that are important to enhance understanding of the phenomena. Furthermore, this research design is significant for our study, since according to Merriam (2009) it is a design that is useful to develop a knowledge base within a topic. It also gives an in-depth and holistic description of an occurrence, as well as improves understanding of how different variables interact, which our study aims to achieve.
3.4 Case study design
The multiple case study design is appropriate because the object for this thesis is to find evidence for the big picture (Stake, 2005), meaning “how to establish and maintain relationship quality in an offshore outsourcing relationship". Mirriam (2009) describe the multiple case study design as being based on data collection from several cases and the focus is not mainly on the specific cases. Consequently, data have been collected from six different companies in various industries. Furthermore, when conducting the multiple type of study Stake (2005) state the cases should somehow be bound together in a categorical manner. The six selected cases in our study all have common characteristics, one of these are that they all are in some way involved in offshore outsourcing to India. Moreover, the multiple design also enables us to arrive at a more solid conclusion. Since according to Yin (2014) the evidence produced will be supported by more than just one case. The fact that six cases where studied was mainly due to accessibility and time limitation. Also, studying more cases would have made it difficult to make an in-depth analysis of all cases.
3.4.1 Sampling
What cases to study should be determined before the initiation of gathering data (Mirriam, 2009). Gathering of data can be based on probability or non-probability sampling. The probability sampling is applied in order to make a statistical generalization, the most well known example of this is random sampling. However, this is not the objective of this study, since it is conducted with a qualitative method. Instead Mirriam (2009) recommend using non-probability sampling for a qualitative study. The adapted sampling in this thesis is
therefore a non-probability sampling. This sampling will enable understanding of what occurs and what the occurrence leads to, as well as the link between different occurrences. Within non-probability sampling, purposive sampling is the most common. Because this thesis aims to discover, understand and obtain insights Mirrim (2009) suggest a purposive sampling to be applied.
Bryman and Bell (2011) describe purposive sampling as when the sample is not chosen on random basis. In this thesis purposive sampling was applied to find and select the participants. Furthermore, Bryman and Bell (2011) explain that the researcher need to be clear on the criteria for the specific study in order to select the cases that are relevant.
1.! The interviewee is involved in the process of offshore outsourcing either as a client or vendor
2.! The clients have to outsource one or several activities to India
3.! The vendors have to deliver one or several products or services from India to a Swedish client
3.4.1.1 Interviewees
The following interviewees were selected based on the criteria: Client
1.! Håkan Swanson is the strategic sourcing and supplier relationship manager at Ericsson. Outsourcing experience to India for 20 years, additionally for 10 years Swanson worked with outsourcing in the automobile industry.
2.! Rajesh Srinivas is the global manager for software testing in Volvo Construction Equipment. Outsourcing experience with Volvo is 5 years, however he has previous experience from working software development and testing projects in India
delivering to UK, US and China.
3.! Fredrik Ahlström is the Senior Vice President of Swedmec. Swedmec has been outsourcing to India for 12 years.
Vendors
4.! Sameer Deolalikar is business development manager at Quest Global Engineering Services Pte Ltd, with responsible for global account management in sales. Quest Global has 17 years of outsourcing experience.
5.! Pär-Olof Olsson has a director position in CGI. His experience from operating outsourcing in India is 7 years.
3.5 Data collection
3.5.1 Primary data
The empirical data can be primary or secondary (Blumberg et al., 2011). In this thesis the empirical data is primary because it is insistent with this thesis propose and gives the opportunity to answer our specific question. Secondary data will not be used because as Blumberg et al. (2011) explain that when secondary data is used the information is already gathered. Others collect the data for a different purpose, therefore it is not always applicable and trustworthy for one's own study. In differ to secondary data; primary data is collected first hand by the authors with the purpose of answering the specific research question. It also offers the authors the chance to ask follow up question and to interview suitable persons who have the experience related to the thesis specific purpose. Our primary data will be collected through interviews with professional from both client and vendor companies.
3.5.2 Design and structure of interviews
Semi-structured interviews where performed since the purpose of semi-structured interviews is for the researcher to understand the perspective of the informant’s as well as analyse if the empirical finding go in line with the already known theoretical information (Blumberg et al., 2011). The respondents were individually selected based on having outsourcing activities to India. Since the authors wanted as many fixed factors as possible, because this would facilitate the analysis and enable to draw a more accurate conclusion.
For our semi-structured interviews we had a base of interview questions prepared before, (Appendix A) these were the same to all interviews, with minor adjustment depending on if the interview was conducted with someone from the client or vendor perspective. This in order for the interview’s to be as similar as possible. In the operationalization, table 3.1, the reasoning and purpose behind the questions is explained, as well as what they aim to obtain information about. The semi-structured interviews allowed for the informant to some extent explain in his/her own way and the researchers could ask follow up question when needed to get a better understanding. Since the focus of this qualitative study is to understand the reason behind the phenomenon it is of importance that the interviewed is able to express and
al., 2011). Furthermore, there are other ways to increase the validity of the respondents’ answers. Denscombe (2009) propose the researcher to compare the different respondent’s answer or to compare the answer with other sources of data. Another way to increase validity is to brief the respondents with the empirical findings to ensure you understood them correct. The semi-structured interviews allowed the authors to ask follow-up questions. The follow-up questions were asked in order to attain needed information when the respondent did not elaborate clearly. Besides this is a method to minimize misunderstandings by asking the respondent to clarify and to steer the discussion depending on the course of conversation. Another reason to keep it structured and have a base of question prepared is since the authors do not have the expertise and experience in interviewing, so having a base of question already prepared will provide safety in case the authors become nervous.
Both authors were present during the interviews. Trost (2010) and Blumberg et al. (2011) argue this deepens and ensure the comprehension of the interview. Qualitative interviews in person are to be preferred since these are argued to give the richest feedback (Alvesson, 2011). However due to geographic distances we had to conduct phone interviews as well. The telephone interviews were more concise and direct. A few years ago phone interviews were argued not to be as reliable as in person interviews, however this is not the case today.
Denscombe (2009) argue that respondents are as truthful in telephone as in person and there is still great prospect of gathering representative sample.
3.6 Operationalization
Before writing the interview questions it is important to have done a profound literature review (Jacob & Furgerson, 2012). By doing so the authors gain knowledge of the topic in terms of what previously have been written as well as what is missing and needs to be explored. Potter (2013) explain the concepts for the empirical research needs to be
operationalized because the concepts are abstract terms there is no link between them and the real world. Kvale (1996) say that when conducting semi-structured interviews there should be an outline of the concepts from which questions about the subject is developed for the
interview guide. Our interview guide (see Appendix A) is based on key aspects from the literature review, with one or several questions on each topic (see Table 3.1).
Table 3.1: Operationalization. Own table.
Concepts
Interview
question
Reasoning
Outsourcing 1-8 First we asked a few questions to grasp how the companies work with outsourcing and what the interviewees define outsourcing to be. As well as what the company aims to achieve by outsourcing and perceived risks. We also asked questions to enhance understanding of how outsourcing contracts are established.
Successful outsourcing
9 To identify what the interviewees consider a successful project to be. This in order to find out if the outlook is the same as found in literature as well as if both the client and vendor have the same criteria’s for a project to be successful. Unsuccessful
outsourcing
10 To be able define what an unsuccessful outsourcing project is and find significant factors for why some projects are
unsuccessful. Relationship
quality
11,12 To open up a discussion about what the interviewees think a good relationship is, as well as how to handle conflicts and problems without a negative impact on the relationship. Trust 13,14 To understand how trust is developed and maintained in a
Commitment 15,16 To grasp how the client and vendor commits to an outsourcing project.
Satisfaction 17 To determine what factors are being used to evaluate if the client/vendor is satisfied with the project.
Culture 18 To examine how the companies adapt to the Indian culture, if they do.
3.7 Method of data analysis
Analysing qualitative data is the process of taking the complex whole and breaking it down to manageable parts (Ghauri & Grønhaug, 2009). The authors employed the approach of
cumulative analysis to the data during the empirical material gathering process, this allowed the authors to bring forward follow up interview questions that emerged from previous findings (Snyder, 2012). This approach also gave the opportunity to adapt the literature review accordingly to findings during the process.
The authors followed Silverman (2010) and, Miles and Huberman (1984) recommendation of starting the analysis with a data reduction to by coding the data and dividing the data into sub categories to find themes. Continuing the process with removing excess data as well as electing, simplifying and transforming data to obtain the information relevant to the focus of studies (Silverman, 2010, Miles & Huberman, 1984). The selected information helped the authors identify a pattern, which where used to further develop the conceptual framework (Mirriam, 2009). Bryman and Bell (2011) state that when having a qualitative research strategy and doing a multiple case study a comparative design is suitable to apply. So for the authors to discover similarities and differences, the empirical cases findings for each case was compared to the other cases, as well as the literature. Silverman (2010) explain that
3.8 Quality of research
According to Merriam (2009) all researchers aim to produce reliable and valid results in this chapter we will present how our process contributed to increase the reliability and validity in this research.
3.8.1 Validity
Internal validity is explained by Merriam (2009) as to what extent the results reflect the reality and if the researchers study what believes to be studied. Since this study was
conducted with a qualitative method, giving emphasis on word expressed by the interviewees there is a great area for interpretations. In order to minimize these interpretations as well as misunderstandings we decided to give the interviewees the chance to review the draft as well as give feedback and comments. Yin (2014) argue that this increase the internal validity since corrections made in this process will enhance the accuracy of the study.
Merriam (2009) and Yin (2014) mention triangulation as a way to increase the validity. Meaning that there are several sources to complement and verify each other or several researchers to discuss the collected data in order to reach consistency in the findings. As this study was a multiple case study as well as two dimensional, we argue that the study reached a more holistic perspective and greater convergence in the collected data. Further the
researchers of this thesis also discussed the findings during the collection of data.
External validity is described by Merriam (2009) is as to what extent the research results can be applied in other fields or situations. To reach external validity there first has to be internal validity, which Merriam (2009) argue that qualitative studies often have. However the results are affected and can most often not be generalised. The aim of a qualitative study is not for the result to be generalized, the aim is to investigate which is what this study aims to do. Since we conducted a multiple case study of clients and vendors working with outsourcing between Sweden and India, we argue that the data collected and the results found to be representative for all companies working with outsourcing between Sweden and India.
3.8.2 Reliability
research it is not likely that the result will be the same since the reality of the individual will continuously change as will their choice of words (Merriam, 2009). Trost (2010) further argue that in a qualitative research one cannot expect the result to be the same, since the aim is to investigate what is not consistent. However he argues that it is important to show credibility in your research. It is argued that knowing the respondent decreases the credibility in an interview. One of the interviewed was a family member to one of the researcher. However the interviewee possessed valuable knowledge and experience of importance for the study just like the other interviewees.
4. Empirical findings
In this chapter we will first provide the reader with information about the interviewees as well as the company they represent. Secondly we will present the empirical finding gathered during the interviews. Since we have interviewed both client and vendors we have separated them in this chapter in order to simplify the reading. First we will present the client followed by the vendor.
4.1 Interviewee
4.1.1 Clients Håkan Swanson
Swanson is employed by Ericsson as strategic sourcing and supplier relationship manager. Ericsson build mobile infrastructure as well as manages and runs networks for clients, which are telecommunication and television operators. They also deliver media and IPTV.
Rajesh Srinivas
Srinivas works for Volvo in Eskilstuna. Volvo is in the automotive industry, Srinivas division manufacture construction equipment. He works as global manager for software testing, his group is responsible to test the software in the electronic control units at Volvo CE.
Previously, he worked with several software developments and testing projects in Bangalore, India, delivering services to global customers in UK, US and China.
Fredrik Ahlström
Ahlström is the Senior Vice President of Swedmec. Swedmec deliver marketing and sales services to European companies within the OEM, Original Equipment Manufacturing, industry. They have been outsourcing mainly to the TATA Autocomp Systems division in India.
4.1.2 Vendors Sameer Deolalikar
Deolalikar is working for Quest Global Engineering Services Pte Ltd., a software outsourcing vendor. Three years ago he got his current position as business development manager,
their engineering goals. The company have a sales office in Sweden and perform the outsourced activities in the Indian office.
Pär-Olof Olsson
Olsson has a director position in CGI, with responsibility for 32 services. CGI is a company within the IT industry that works with operation of infrastructure. Swedish companies such as Telia and Electa outsource parts of their IT operations to CGI, which therefore makes CGI a supplier of outsourcing services. The company has offices in both Sweden and India.
Pavel Siddique
Siddique is the co-founder of Indpro. His current position in the company is CEO. The company Indpro composes development teams for Swedish software companies’ both in Sweden and in India.
4.2 Outsourcing
Srinivas explains that for Volvo outsourcing is traditionally when you try to move out some non-core work, outsourcing is“efficient for us in terms of criticality”. There are several issues that the company tries to resolve by outsourcing such as cost, competence and scalability. If you outsource to India where cost is relatively low and the effectiveness is the same, you get more work done for the fixed budget. So outsourcing is a smart technic both to improve capacity and become more efficient.
Ahlström defines outsourcing as when you decide that a service or a part of the production should be performed by someone outside the company, an external supplier. This external supplier can either be nearby, in-house own facility or far away as for example in India. Companies outsource in order to gain access to more capacity internally. To be able to focus on certain part of the internal production or if the company aims to focus more on value adding activities rather than the internal production. Additionally it is a way for the company to cut costs. It can also be a way to make improvements by sourcing to a specialist that has knowledge that the company lacks within a specific activity.
Deolalikar: “Outsourcing in itself is very complex, there are multiple levels of outsourcing.
You can start from the basis of outsourcing, which is a type of resource argumentation where you provide resources to the customers. The next level you can go into more of a solution selling, where you propose a solution to your clients.” Deolalikar says that there are three
main reasons for outsourcing. First there is the financial aspect, for the client to cut cost by moving parts of the value chain to low wage countries. The second reason is to access the right talent. Deolalikar argues that many European countries lack the highly skilled engineers. The third reason is when a company lacks the capability to produce the demanded amount. He further explains the concept of strategic outsourcing, which is when non-core activities are outsourced in order to be able to focus on core activities.
of time and are fairly basic as well as vastly repetitive. Olsson says their aim with outsourcing is to lower the costs.
Siddique explains in Swedish that they define their business, or the way they work with outsourcing as the four K’s. This in English would be competence, capacity, cost and quality. Siddique defines outsourcing as when one company buy competence that cannot be found within the own company. This gives the company the opportunity to focus on its core
activities while the non-core activities are sourced to an external partner who is better at it. It is also a way to cut cost and increase the revenue as well as meeting a demand that the company do not have the capacity to meet with their own personnel.
4.2.1 Successful
Swanson says that there are different views of a successful outsourcing, depending on the goal. One way is to close your own local production, find jobs for the ones who were laid off and have a clean exit at home, another: “if you manage to move this product to another
region, another supplier, you get a good price a good saving and quality is fine, then it is easy to say that is a good outsourced project, yes”. Swanson further emphasises the importance of
quality and different views in standards, a successful outsourcing does not need to be brought back due to quality or other problems. Swanson also adds the significance of the supplier being satisfied “when the supplier is happy the supplier delivers”.
According to Srinivas a successful outsourcing project is when “both parties have met their
goals of the outsourcing” assignment and create value both ways. A key aspect is that the
vendor actually manages to deliver the project in accordance to what was agreed upon. Furthermore, he explains that, Volvo as an organization evaluates the success of a process in terms of “variables such as quality, delivery, time and cost”. It is also important that the project is not just fruitful for one side; it needs to be beneficial for both sides.
Ahlström explains that for outsourcing to be successful it is of essence that both the client and the supplier are satisfied with what has been achieved when the project is finished. Since the aim of what should be achieved differs, one cannot define what success is, it depends on the requests and the agreement. However “the outcome needs to be correct, which means that the
Deolalikar states that there are a number of factors to take into account when determining if the outsourcing is successful. Firstly, the objectives for the project need to be defined and achieved. Secondly, there is the matter of the time, it has to be finished in time. Thirdly, guidelines for quality are required to be fulfilled. Fourthly, the aim for the company might be to enter a new market or customer base, and then this needs be achieved.
Olsson declares that in order to achieve success in a project “It has to be clearly defined, that
is the first rule, and then it has to be measurable in order to be able to follow up. It should contain very specific instructions”. It is of highest importance to have distinct instructions for
what should be performed. “In my experience India is very dependent on the following up, it
is very important for them to be productive and they want to be measured how they are doing”. In order to evaluate if a project is successful CGI have certain criteria that they look
upon such as KPI (Key Performance Indicators) and SLA (Service-Level Agreement). There is also a case management system in place, to have an overview of the amount of time a project has taken. In regards to quality it is more challenging to measure since it is a service being delivered.
Siddique says a successful outsourcing is when a project is completed and everyone is a winner. Siddique explains that they have project cards to follow up and realize if a project has been a success. Indpro look at aspects such as the prosperity for the client, the vendor and in the delivery as well as the economical turn-out.
4.2.2 Unsuccessful
According to Swanson an unsuccessful project depends on the definition of a successful one. Most often it is because the background check is not done properly. Both in terms of the vendor as well as one's own company, the standards have to be understood and compatible. Changes have to be communicated and understood by both parties. “Make sure they
understand, ask a lot of questions to make sure they are heading in the same direction.”
projects can be that there are different opinions about what success means. Usually the parties are looking at different parameters when evaluating a project, these parameters are then interpreted in different ways. “I mean I have cases where output is zero but still
communication is excellent, things still run. But I also know of cases where the output is fantastic, but no communication, the project still is a failure. So communication is very, very, very essential”
Ahlström says that they have had projects with companies, other than TATA, in India that have been less successful. The main issue was the quality, it did not live up to the
expectations. Quality is not the same thing for us in Sweden as in other countries. In India the product might be good enough for them, which is when it fulfils claims according to the drawings. Meanwhile if visual aspects are not written down there is a high chance for deviations, because of the different view on quality. You have to explain the expected standards to the vendor and perhaps bring them to Europe so they can see how it works here in order to better understand the European standards. Having face to face meetings is a way to actively work with this issue.
Deolalikar explains that there are multiple reasons for a project not being successful. The first factor and largest challenge is to understand the client's requirements for the project. If the requirements are not understood correctly, then you will delivery something that the customer is not happy with. The second factor is not meeting the criteria. This occurs when there is a lack of commitment and support from the client's management. If the client does not have these business values the project will end up at the bottom of the priority list.
Olsson have identified unclear requirements as the main reason for unsuccessful outsourcing. He says you have to be very clear, almost excessively clear, since there are cultural
differences we all think in a different way. “In my experience they (Indians) are very
competent, they have a high education level and they know a lot but they have an insecurity in taking own initiative”, he says this is due to the hierarchal differences. If the requirements are
blurry it will result in a product lacking in quality.
example of when you cook food with a friend. You ask your friend to chop onions, “in your
world you wanted sliced onions, while the other person diced it. Maybe a bad example but the client often needs to first have a clear picture of what he wants and then express it clearly. This is what I want. Often a failed project is when these two parts do not fit. Either the picture is not clear enough, that you realized that you wanted sliced instead of diced or you know what you want but you did not anchor it”.
4.3 Relationship Quality
Swanson explains that you need a governance model to govern the relationship. It is of essence for you to have an executive business review that is run once or twice a year with the very high level directors in both companies. This is in order to set the expectations as well as to get the temperature of both companies. There is also supplier day twice a year, where all of the suppliers meet and the company communicates the way ahead and future goals. The communication needs to be trustworthy, therefore it is not just mails and phone calls.
However, this is higher prioritized when the supplier has big orders. To resolve a problem or conflict Swanson experience is that you have to meet. You sit down, have tea and spend time with the supplier. Play on the relationship, the good relationship you are supposed to have with the manager, it is not enough to send an email and the contract will not help you. If you have a good relationship with the manager you will make things work for sure, but you need to put time into establish a good relationship.
Srinivas describes that what constitutes a good relationship is number one trust “I think what
drives relationship in my perspective is trust and respect”. Credibility is also very important.
If you say you are going to do something, you have to keep your word. When you do not, it is interpreted as that there is something wrong here. Another very significant aspect is
Ahlström thinks that to create a good relationship with an Indian vendor you have to be yourself. You can read all types of books on adaptation to different cultures, but it does not matter today because the world is so enlightened. Just be polite and communicate in a proper and friendly way. It is also vital to be honest and clear in your dialogue. Ahlstöm considers it quite easy to establish a good relationship with Indians. Although when conflicts occur it might be difficult to settle these. There are probably no business deals where there are no problems, there are always unexpected events, someone forgets something or someone has been less clear in their communication. “Again you have to do right from the beginning and
be accurate and responsive towards the client”. Listening is of great importance in order to
figure out what might be causing the dissatisfaction and the cause of the problem. When the root cause is found there is a need for an active dialogue on what is the plan of action for solving the problem.
Deolalikar states that involvement is vital, from all of the significant stakeholder, both on the client and the vendor side, because Quest Global usually handles multimillion dollar deals. A good relationship is achieved when both sides show commitment. Furthermore the
stakeholders need to be addressed in the correct manner. Communication is of significance. It is done via emails and texting as well as personal meetings, dinners, and presentations on conferences. The communication is adapted to different countries, preferably through having someone who speaks the local language. Other aspects to take under consideration are if the country has a high or low context culture and adapt the communication based on this. Attempts are made to have a match between both parties, which can be obtained through respectfulness. When there are issues with the delivery they talk to the customer for feedback about what went wrong, then they priorities the issue and implement change in the business process so it will not reoccur.
Olsson says that in his experience “you should start by learning to know one another. Do not
bother having power points about your own business, start with a good dinner and talk about the weather, family and friends and life. That is the start of it all”. He further explains that in
