IT services offshoring from Japan: a multi-dimensional comparative analysis between India and China

Abstract

Purpose This paper aims to carry out a qualitative analysis to compare India and China as a choice of service-provider from the perspective of Japanese MNEs for information technology (IT)-IT enabled services (ITeS) offshoring destination, using the four dimensions of the cultural-administrative-geographic-economic (CAGE) distance framework by Ghemawat (2001). Design/methodology/approach This exploratory study used a mix of primary and secondary evidence to carry out a comparative evaluation of the challenges and synergies existent between India and Japan relative to China and Japan, in the context of IT-ITeS offshoring industry. Fourteen semi-structured interviews were conducted with multiple stakeholders and the findings were classified using the CAGE framework. Findings The paper discusses that for IT-ITeS industry, owing to its characteristics and the changing global order in the post-pandemic world, the “distances” that matter the most for business engagement between countries are – cultural, administrative and economic. Based on the comparative analysis, it was seen that China fares better than India, from a Japanese perspective, for the case of cultural and geographic distances while India had an advantage in the case of administrative and economic distances. Thus, India and Japan seem to have higher synergies and potential mutual gains by expanding engagement in the IT-ITeS industry in future. Research limitations/implications One of the limitations of this paper was the lack of comparable secondary data source concerning the size, growth rates, exports, employment figures for China that could have helped establish the contrast in the structure of IT-ITeS industry of India and China. Originality/value This study provides a framework for a comparative analysis of multiple facets of “distance” between competing service providing nations at bilateral, as well as unilateral level, in a holistic manner for the IT-ITeS offshoring industry. The results thus provide the gaps that shall be bridged by the policymakers for realizing mutual benefits.