The analysis of the innovation level for IT&C services offshoring to Romania.

Tamasila, Matei ; Taucean, Ilie Mihai

1. INTRODUCTION

Globalization has changed the way firms compete, including their approaches to supply chain based production, long-term corporate strategy and even organizational structure. Technological and telecommunications advances have enabled firms to locate not only production facilities abroad, but also to shift certain service activities to foreign locations (Bunyaratavej et al., 2007).

The revolution in Information and Communication Technologies offers developing countries new opportunities (for services-based export-led growth), this is because of two features: first, an acceleration in the process of outsourcing of IT and IT-enabled services by corporations in the developed countries; and second, an increase in the extent of offshoring of these outsourced activities to countries low-cost (Chandrasekhar, 2006).

Starting from these premises we consider that the Romanian market represents one of the best alternative for the IT&C services offshoring, at least in case of European developed countries.

In order to sustain the previous hypothesis follow-up we propose a methodology able to identify the innovation level of the proposed IT&C services offshoring, based on a global innovation indicator, [I.sub.I], achieved through the level-headed summing up of three indicators: the indication of the enterprise satisfaction IES, corresponding to the exciting characteristics from Kano's model (Kano, 1984), the indicator of inventiveness, [I.sub.IN], associated to Altshuller's five levels of inventiveness (Altshuller, 1999), and the indicator of ideality, [I.sub.ID], which reflects the degree of ideality, and using the following relation:

[MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] (1)

where [p.sub.ES], [p.sub.IN] and [p.sub.ID] represent the weights corresponding to the three indicators, [i.sub.1], [i.sub.2], ..., [i.sub.9] are the indicators of the degree of ideality, and [q.sub.1] [q.sub.2] [q.sub.9] are the weights of the indicators of ideality. The sum of the weights from each category is equal to 1, i.e. [p.sub.ES] + [p.sub.IN] + [p.sub.ID] = 1 and [q.sub.1] + [q.sub.2] + ... + [q.sub.9] = 1. Some weights can be null, as function of the field where the methodology is applied.

2. THE INDICATORS LEVEL ESTABLISHING

Generally, the characteristics of a product, according to Noriaki Kano's model, from the point of view of customers' satisfaction, are as follows: non-satisfying characteristics, satisfying characteristics, and charming characteristics.

In the proposed methodology, we have considered that it is necessary that the indicator of the enterprise's satisfaction, IES, refer only to the exciting characteristics from Kano's model, because, their achievement implies an innovation effort from the part of the enterprises, and also they represent, most often, the decisive element for the success of a business (Tamasila, 2008).

For the assessment purposes, there has been proposed that [I.sub.ES] indicator be attributed grades on a scale from 1 to 10, as function of the number of exciting characteristics (see table 1).

In order to take into account the degree of inventiveness, there has been proposed in the paper to make an adjustment on the basis of the five levels of the inventiveness solutions and of the required inspirations sources established by Altshuller, with the grades corresponding to the inventiveness indicator, [I.sub.IN] as follows:

Level one activities--which do not imply any invention, can be achieved by routine improvements of some existing products through well-known methods in the field (grade 2).

Level two activities--which imply minor improvements of some existing products; the inspiration source comes from the scientific field where the designing engineers work (grade 4).

Level three activities--which imply fundamental improvements of some existing products through known methods; the solutions shall be looked for in related fields or in other fields (grade 6).

Level four activities--which imply new products or new generation products for which there are used new principles, and the solutions come from the clearing up of some phenomena from various fields (grade 8).

Level five activities--which imply rare scientific discoveries, whole new products, whose solutions can be found by exceeding the borders of the scientific knowledge known at a certain moment (grade 10).

The ideality indicator, [I.sub.ID], takes into account the ideality of the product through nine indicators. These indicators are as follows: indicator of the system dimensionality degree ([i.sub.1]); indicator of the aggregation status ([i.sub.2]); indicator of the type, nature, and frequency of the actions applied to the system [i.sub.3]; indicator of the degree of the system "porosity" ([i.sub.4]); indicator of degree of the system dynamic capability ([i.sub.5]); indicator of the degree of human involvement ([i.sub.6]); indicator of the degree of the system multiplicity ([i.sub.7]); indicator of the nature, type and dimensionality of the system functions and features ([i.sub.8]); indicator of the degree of the system convolution ([i.sub.9]).

3. CASE STUDY

In order to highlight the use of the developed researches, below is presented the application of the proposed methodology for the very assessment of the level of innovation of the IT&C services offshoring for Romanian market.

3.1 The determining of the indicator of the enterprise satisfaction (IES)

It has been considered that there are at least 5 exciting characteristics, such as: the low level of labour cost, the very good level of human resources qualification, the absence of communication barriers (almost all people can communicate at least in one foreign language), the absence of cultural barriers (Romania is a part of European/Occidental culture) and may be the geographical (physic) proximity. According to the grades scale, the indicator IES is given grade 9.

3.2 The determining of the inventiveness indicator ([I.sub.IN])

For this case study, to the indicator [I.sub.IN] it was given grade 8, because the IT&C services offshoring imply more than fundamental improvements of some existing processes that assume new generation of structures/products/services for which there are used new principles, as a consequence of: redesign of value chains of organisation, increased focus on core competencies, disintegration of certain support functions from their value chains and begin to substitute loosely coupled forms for tightly integrated, hierarchical structures.

3.3 The determining of the indicator of ideality ([I.sub.ID])

This indicator reflects the degree of ideality. In order to determine the level of ideality, in this case, there have been taken into account only the indicators [i.sub.1], [i.sub.2], [i.sub.5], [i.sub.6], [i.sub.7] [i.sub.8] and [i.sub.9] because it has been considered that only these ones are relevant.

Thus, indicator [i.sub.1], which gives the system degree of dimensionality, it was given grade 10, according to the presented classification, because the offshoring process involves four phases: making, mapping, managing and measuring. Indicator [i.sub.2], estimates the size of the system, it was given grade 10, because the offshoring is being developed by big&large enterprises. Indicator [i.sub.5], which shows the degree of flexibility, it was given grade 3 because the system dynamic capability develops inversely proportional to its dimensions. Indicator [i.sub.6], namely the degree of human involvement, has been given grade 10, because one of the main reasons for the IT&C services offshoring is labour cost.

The degree of the system multiplicity, taken into account through indicator [i.sub.7], it was given grade 8, because it can be achieved with at least four plans to the level of organisation: strategic, economic, structural and human. Indicator [i.sub.8], which estimates the dimensionality, it was given grade 10, because the IT&C services offshoring implies all 5 functions (planning, organizing, decision, coordination and control).

The indicator of the degree of the system convolution ([i.sub.9]), it was given grade 3, because the ratio between the number of action plans (which is 5: back office, customer contact, common corporate functions, knowledge services and decision analysis, research and development) and the number of sample functions (which is 18: basic data entry, transaction processing, document, management, customer relations, telemarketing, collections, shared corporate, services, help desk, maintenance, infrastructure, applications--development, research services, customer analysis, portfolio analysis, claims processing, risk management, content development engineering and design, new product design) is 0,27.

The seven indicators taken into account there were given the following weights: [q.sub.1]= [q.sub.7]= 0.05; [q.sub.2]= 0.10; [q.sub.5]= 0.15; [q.sub.6]= 0.25; [q.sub.8]= [q.sub.9]= 0.20. The other weights corresponding to the eliminated indicators have been considered to be null.

3.4 The calculation of the global indicator of the innovation level [I.sub.I]

In order to calculate the global indicator, there have been established the following weights associated to the three indicators: the weight of the indicator of the enterprise's satisfaction [p.sub.ES] = 0.35, the weight of the indicator of inventiveness [p.sub.IN] = 0.50 and the weight of the indicator of ideality [p.sub.ID] = 0.15.

Finally, through the use of relation (1), the global indicator of the innovation level of the methodology proposed in this paper came to be equal to 8.26.

4. CONCLUSION

The innovation level of Romanian market as a solution for IT&C services offshoring, in accordance by our proposed evaluation model is more than good in this moment (scored 8.26 out of 10). In our opinion, the result is a consequence of a very good value of inventiveness indicator as a resultant of two major influences: the opportunities (economic, human, cultural, etc.) of Romanian alternative an in the same time the revolution in Information and Communication Technologies which offers unlimited development/increase possibilities.

By applying the methodology proposed, subjectivity can be eliminated in the assessment of the activities & products innovation level. The weights can be further modified (in future analysis) by taking into account indicators importance in the given assessment.

5. REFERENCES

Altshuller, G. (1999). The Innovation Algorithm: TRIZ, Systematic Innovation and Technical Creativity, Technical Innovation Ctr, ISBN 978-0964074040, Worcester

Bunyaratavej K.; Hahn E.D. & Doh J.P. (2007). International Offshoring of Services: A Parity Study, Journal of International Management, Volume: 13, March 2007, pp 7-21, ISSN 1075-4253

Chandrasekhar C.P. & Ghosh J.(2006). IT-driven Offshoring: The Exaggerated "Development Opportunity", Journal Human Systems Management, Volume 25, Number 4, 2006, pp 293-294, ISSN 0167-2533

Kano, N. (1984). Attractive Quality and Must-be Quality, The Journal of the Japanese Society for Quality Control, April, 1984, pp 39-48, ISSN 0386-8230

Tamasila, M. & Taucean, I.M. (2008). Model for The Analysis of Innovation Level for IT&C Entrepreneurial Activity in Romania, Proceedings of The 19th International DAAAM Symposium, Katalinik, B. (Ed.), pp 1353-1354, ISBN 978-3-901509-68-1, Slovakia, October 2008, Trnava

Tab. 1. Scale for enterprise's satisfaction level

Grades 1 2 3 4 5 6

Characteristics 1 2 3

Grades 7 8 9 10

Characteristics 4 [greater than or equal to] 5

Tab. 2. Scale for ideality level (*AP = authorized person)

Grades 1 2 3 4

[i.sub.1] 0 1
[i.sub.2] AP micro
[i.sub.5] large big
[i.sub.6] reduced
[i.sub.7] 1 2
[i.sub.8] 1 2
[i.sub.9] 0-0.25 0.25-0.45

Grades 5 6 7 8

[i.sub.1] 2 3
[i.sub.2] small medium
[i.sub.5] medium small
[i.sub.6] medium
[i.sub.7] 3 4
[i.sub.8] 3 4
[i.sub.9] 0.45-0.65 0.65-0.85

Grades 9 10

[i.sub.1] [greater
 than or
 equal
 to] 4
[i.sub.2] big large
[i.sub.5] micro AP *
[i.sub.6] big intense
[i.sub.7] 5
[i.sub.8] 5
[i.sub.9] 0.85-1