Success in Offshoring of Application Development – Does Culture Matter?

Recently, offshoring of information systems (IS) services to external vendors has seen considerable growth. Outsourcing to vendors in foreign countries brings about unique challenges which need to be understood and managed effectively. This paper explores cultural differences in IS offshoring arrangements involving German client organizations that outsource application development activities to Indian vendors. For this purpose, a research framework is developed based on both theoretical considerations and specific empirical observations from multiple case studies. The goal is to (1) explore the nature of cultural differences in offshoring arrangements in depth and to (2) analyze the relationship between those cultural differences and offshoring success. Based on the case findings, implications and practices for the management of offshore development projects are outlined.