Optimization of Service Development Strategy in a Global Environment

Abstract

A well-managed project utilizing global resources helps companies create distinct competitive and operational advantages over centrally managed counterparts. Such advantages come from increased profitability through outsourcing. In this chapter, we present a technique used to assess risk in globally distributed industrial software projects – with a specific focus on custom application development projects. Our objective is to show how to maximize the benefits of globalization and how effective management and resource choices can avoid potential risks by more deeply understanding the effects of external global factors. Specifically, we provide mathematical models for the following global factors: 1) time zone differences, 2) language difference, 3) working time alignment, and 4) turnover rates among skilled workers in expanding economies. We also consider the utility functions of the developer and client and demonstrate that by allowing adjustments to the time to deliver the project one can achieve better profitability with global resources.