CRITICAL SUCCESS FACTORS OF OFFSHORE SOFTWARE DEVELOPMENT PROJECTS

Index

Company-related Information
Project-related Information
Person-related Information

The second part of the online survey dealt with general information on the participants and comprised company-related information (information on the participants’ companies), project-related information (information on the OSD projects implemented by the participants and their companies respectively), and person-related information (information on the current position of the participants within their companies).

Figure: Company perspective

Regarding the company perspective, the number of participants of the online survey was almost balanced between the different perspectives (compare Figure above). However, while the majority of the participants are employed by OSD clients (39.4 percent) and providers (37.4 percent), only 23.2 percent of the participants work for consultancies in the field of OSD.

In regard to the company size, we differentiated among micro, small and medium-sized (SME), as well as large-scale enterprises (LE). In line with the definition proposed by the FMER (2004), a micro enterprise represents a company with less than ten employees and annual revenues of up to two million euros. Further, the FMER (2004) defines a SME as a company which has less than 250 employees and maximum annual revenues of 40 million euros. All other companies are classified as LE.

Based on the presented company classification, it became apparent that almost half of the participants work for LE (49.5 percent). Approximately one third of the participants are on the payroll of SME (32.0 percent). In contrast, only 18.5 percent of the participants are employed by micro enterprises (compare Figure below).

Figure: Company size

In consideration of the industries of the participants’ companies, we only differed between companies within the IT industry and within other industries. Here, again, a good balance among the participants was able to be observed: While 54.4 percent of the participants work in the IT industry, 45.6 percent of the participants are employed in other industries.

Figure: Company objectives[1]

Regarding the objectives associated with the engagement of the participants’ companies or their clients respectively in OSD, the objective most frequently mentioned by the respondents was the reduction of labor costs (78 of 103 possible mentions). Other frequently mentioned objectives were the prevention of capacity constraints (66 mentions) as well as the concentration on core competences (54 mentions) (compare Figure above).

Figure: Experience of participants with different regions of destination[2]

With regard to the offshore regions of destination, we combined the offshore countries Estonia, Latvia, and Lithuania (Baltic States) as well as the Czech Republic, Poland, Romania, Russia, Slovakia, and the Ukraine in the region “Eastern Europe”, and the countries China and India in the region “Asia”. Ireland and other countries were assigned to the category “Others” (compare Figure above).

On the basis of the presented country classification, it became apparent that the participants primarily implemented OSD projects in Asia. 72 of the 103 participants possessed experience with OSD in this region. 54 participants exhibited corresponding experience in Eastern Europe. In addition, 31 participants already gained experience with other offshore regions of destination.

In regard to the participants’ experience with different organizational forms of OSD projects, particularly the cooperation with an exclusive offshore provider was mentioned by the participants (48 mentions). 37 and 34 participants respectively stated that they have already implemented OSD projects with support of an offshore provider, which possesses a domestic office, or an IT subsidiary respectively. On the contrary, only 20 participants have cooperated with a joint venture in the OSD context (compare Figure below).

Figure: Experience of participants with different organizational forms[3]

Regarding the software services relocated to offshore countries, a clear dominance of the development of individual and standard software became apparent. 95 of the 103 survey participants were in possession of experience with this type of OSD projects. Experience with OSD projects, concerning the maintenance/migration of software as well as the development of web applications, was stated by 65 and 51 participants respectively (compare Figure below).

Figure: Experience of participants with different project types

In consideration of the average size of the OSD projects implemented by the participants and their companies respectively, it is noticeable that the majority of these projects can be classified as medium-sized projects (42.4 percent), that is projects which either have a duration of more than six months and comprise less than 20 employees, or have a duration of less than six months and comprise more than 20 employees. The predominant implementation of small OSD projects (projects with a duration of less than six months and less than 20 employees) as well as large OSD projects (projects with a duration of more than six months and more than 20 employees) was quoted by 26.3 percent and 31.3 percent of the participants respectively.

In respect of OSD project experience, more than half of the participants (52.5 percent) stated that their companies possess more than three years of experience with OSD and have implemented more than three of such projects within the last three years, which corresponds to a high project experience (compare Figure 48). 30.3 percent and 17.2 percent of the participants respectively categorize the OSD project experience of their companies as medium (more than three years of experience or, alternatively, more than five OSD projects) or as low (less than three years of experience and less than five projects).

Figure: Project experience of participants

Figure: Position of participants

The Figure above clarifies that more than 90 percent of the respondents take on a leading position (at least temporarily) within their company. While 42.7 percent of the participants are members of the management board or directors of their company (strategic level), 47.6 percent of the respondents take on (project) manager positions (tactical level). In contrast, less than ten percent of the participants work on the operational level of an OSD project (9.7 percent).