Selection decisions of offshore ITO service providers for strategic alliances - an AHP-based approach

Increasing trends towards offshore business model for IT service delivery motivates client organisations looking for offshore partners, who have the ability to match their strategic business requirements. One of the critical steps in this endeavour is the selection of an offshore supplier among many potential alternatives. Therefore, the offshore supplier selection decision has emerged as an important aspect of strategic alliance formation. Given the multi-criteria nature of the offshore supplier selection decision, this article proposed a comprehensive problem definition hierarchy highlighting the key elements (criteria) at its various levels based on a thorough study and analysis of the existing literature on IT outsourcing (ITO) industry. A data collection instrument is designed to capture comparative judgements from Indian practitioners on relative importance of each element in the hierarchy. Analytic hierarchy process (AHP) is applied to synthesise the captured data to get the normalised weights of these criteria. Lowest level criteria are eventually used to rank three suppliers to test the veracity of the proposed hierarchy. At the end a sensitivity analysis is conducted to verify the stability of the outcome.