Friedrich-Alexander-Universität Erlangen-Nürnberg

CRITICAL SUCCESS FACTORS OF OFFSHORE SOFTWARE DEVELOPMENT PROJECTS

Lehrstuhl für BWL, insb. Wirtschaftsinformatik III, Prof. Dr. Michael Amberg
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Research Context

The first part of the interviews focused on general information in regard to the 22 interview partners and consisted of company-related information (information on the interview partner’s company), project-related information (information on the interview partner’s experience with OSD projects), and person-related information (information on the current position fulfilled by the interview partner).

Figure: Company perspective

Out of the 22 participants interviewed, three worked for an offshore provider, six within a consulting firm, and seven for an OSD client (compare figure above). Furthermore, two of the interviewees worked for an internal consulting firm situated within an OSD client company (client & consultancy), while four participants confirmed that their companies fulfill the role of both provider and client of OSD services (client & provider).

In regard to the interview partners’ project experience, we particularly focused on their experience with different organizational forms of OSD projects, different company sizes on the part of the client, as well as different offshore regions of destination.

In the context of IT offshoring, Schaaf (2004) differentiates between offshore outsourcing, where the relevant services are rendered by an external provider abroad, and captive offshore outsourcing, where company subsidiaries or joint ventures in a foreign country deliver the respective services. In addition to Schaaf’s (2004) classification, a differentiation can be made between exclusive offshore providers and providers which possess an IT subsidiary or branch office in the client’s country.

The evaluation of the interview data showed that the majority of the participants (17 men­tions) already gained experience with exclusive offshore providers (compare figure below). The second most popular organizational form was the cooperation with an offshore provider, which possesses an office in the client’s home country (eleven mentions). Furthermore, experiences with self-owned IT subsidiaries abroad were mentioned by eight participants, while experiences with OSD projects carried out with a foreign joint venture were only confirmed by one of the interview partners.

Figure: Experience of interview partners with different organizational forms[1]

When examining the predominant company size on the part of the client (compare figure below), the results are relatively balanced. A slight majority (54.54 percent) of the interview partners represented either large-scale clients (LE clients) or providers/consultancies which delivered services to LE clients. The remaining 45.46 percent were employed by small or medium-sized clients (SME clients) or by providers/consultancies, which cooperated primarily with SME clients in the context of OSD projects

Regarding the exact requirements for the separation of small and medium-sized enterprises (SME) from large-scale enterprises (LE), we refer to the definition for SME proposed by the Federal Ministry of Education and Research (2004) [FMER]. According to this definition, a SME is a company which has less than 250 employees as well as maximum annual sales of 40 million euros or maximum total yearly assets of 27 million euros. Furthermore, 25 percent or more of the enterprise may not be held by one or more enterprises, which do not fulfill the definition of a SME.

Figure: Experience of interview partners with SME and LE clients

Regarding the various suitable regions of destinations for OSD projects, nearly half of the participants (45.46 percent) confirmed having already carried out projects in either Asia or Eastern Europe. One of the interview partners even exhibited experience with three different continents: Africa, Asia, and Europe (compare figure below).

Figure: Experience of interview partners with different regions of destination

With regard to the precise countries of destination for OSD projects, India was mentioned a total of 14 times by the respondents, thereby dominating the list (compare figure below). However, further destination countries in Asia such as China (mentioned five times) or the Philippines (mentioned three times) prove to be of lesser importance. Focusing on Eastern Europe, the Czech Republic tends to be the most frequently referred to country of destination for OSD (mentioned seven times), followed by Slovakia and Belarus (both mentioned five times).

Figure: Experience of interview partners with different countries of destination (Top 10)[2]

At large, when evaluating the country-related data, it was surprising that our respondents tended to grant Eastern Europe a small edge over Asia. Nevertheless, the dominant country of destination for OSD projects remains to be India: 14 of the 22 participants have already conducted or accompanied OSD projects there.

Figure: Position of interview partners

All of the interview partners are, at least temporarily, taking on leading roles in their companies (compare figure above). Around one third of the participants (eight of the 22 interview partners) are members of the board or head of their company (strategic level), while six of the participants take on manager positions (tactical level). The eight participants remaining fulfill the roles of project managers in their companies (tactical level), at least for the duration of the project, thereby taking on a leading position.

 



[1] Multiple answers possible.

[2] Multiple answers possible.

References


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