A study of software development project cost, schedule and quality by outsourcing to low cost destination

Abstract

Purpose – The purpose of this paper is to find good values of onsite-offshore team strength; number of hours of communication between business users and onsite team and between onsite and offshore team so as to reduce project cost and improve schedule in a global software development (GSD) environment for software development project. Design/methodology/approach – This study employs system dynamics simulation approach to study software project characteristics in both co-located and distributed development environments. The authors consulted 14 experts from Indian software outsourcing industry during our model construction and validation. Findings – The study results show that there is a drop in overall team productivity in outsourcing environment by considering the offshore options. But the project cost can be reduced by employing the offshore team for coding and testing work only with minimal training for imparting business knowledge. The research results show that there is a potential to save project cost by being flexible in project schedule. Research limitations/implications – The implication of the study is that the project management team should be careful not to keep high percentage of manpower at offshore location in distributed software environment. A large offshore team can increase project cost and schedule due to higher training overhead, lower productivity and higher error proneness. In GSD, the management effort should be to keep requirement analysis and design work at onsite location and involves the offshore team in coding and testing work. Practical implications – The software project manager can use the model results to divide the software team between onsite and offshore location during various phases of software development in distributed environment. Originality/value – The study is novel as there is little attempt at finding the team distribution between onsite and offshore location in GSD environment.

Exploring the transition phase in offshore outsourcing: Decision making amidst knowledge at risk

“…Most literature on knowledge transfer between clients and offshore vendors within offshoring relationships highlights various forms of distance as a cause of knowledge at risk (e.g., Avison and Banks, 2008;Beulen et al, 2005;Cheng et al, 2016;Chua and Pan, 2008;Henley, 2006;Mishra and Mahanty, 2016;Niazi et al, 2016;Youngdahl and Ramaswamy, 2008). The recently emerging transition literature suggests there is an alternative perspective related to the timing of ongoing decisions (i.e., the 'when' question) that has not received adequate attention.…”

“…We argue that clients can be put in a vulnerable position because of the effects of timecompression diseconomies (Dierickx and Cool, 1989): the pace in which decisions are made to attempt to transfer knowledge to vendors and draw on vendors in search of superior performance. If vendors are not ready or able to absorb new knowledge from the client (e.g., because they lack business knowledge of the client), then productivity will suffer (Mishra and Mahanty, 2016). According to theory of time-compression diseconomies, people are limited in their ability to learn quickly (Simon, 1959;Vermeulen and Barkema, 2002).…”

“…These are: (1) to engage in offshore outsourcing for a specific project / system development activity, and (2) to use a specific vendor in an offshore location for this work (Chadee and Raman, 2009;Liang et al, 2016). However, subsequent decisions will still need to be made on an ongoing basis, relating to: (1) the evolving role that the client-side onshore team will have in transition governance (Aydin et al, 2010;Beulen et al, 2011;Lacity and Rottman, 2008;Mishra and Mahanty, 2016;Tiwari, 2016); (2) the evolving role that the vendor-side offshore team will have (Mishra and Mahanty, 2016;Williams, 2011); (3) relational governance and how the client and vendor teams will interact and share knowledge, in particular, how much rotation of vendor staff between offshore and onshore locations will take place in order to overcome communications challenges Niazi at al., 2016;Ranganathan and Balaji, 2007;Williams, 2011); (4) the lead person(s) in the vendor team responsible for overseeing knowledge absorption of the vendor team as well as ongoing allocation of tasks offshore (Chang and Gurbaxani, 2012;Liang et al, 2016;Niazi at al., 2016).…”

“…Secondly, the literature suggested a scenario in which the attempt at transfer by the client is insufficient in itself to enable the vendor to deliver work activities as required by the client. Knowledge has been shared but not yet internalized and utilized by the vendor (e.g., Mishra and Mahanty, 2016). The client intends for certain work to be carried out by the vendor that the vendor is unable to deliver.…”

“…The vendor's stock of knowledge assets concerning the client organization, systems and commercial environment has not been accumulated efficiently (Dierickx and Cool, 1989;Mishra and Mahanty, 2016) and they are not able to perform to a level expected of them by the client.…”