Unless organizations recognize the unique challenges
associated with remote management in offshoring and provide
appropriate training to their project managers, their initiatives
are likely to face increased levels of failure risk.

 

needs almost always results in a high number of flawed technical decisions that must be revisited and corrected at later stages.” Thus, it may be useful to work with a vendor familiar with the native business context of the client. This may be especially valuable when the project requirements are not well structured and design decisions will need to be made during the project execution.

With respect to technical know-how, most panelists acknowledged that offshore vendors are more often than not adept in software development work. But the experts also indicated that without easy access to the assigned resources and a clear visibility of their working patterns, assessing vendor capabilities can be tricky. For example, one panelist warned that “any large offshore outsourcer will likely have a claim of a high CMMI [Capability Maturity Model Integra-tion] level. However, this is not fully indicative of the process maturity of the actual team that will be working on the project.” Another cautioned that “the available skills and knowledge are sometimes misrepresented by offshore management or are not available when needed on the project schedule.” While a precontract evaluation can help, the experts commented that assessing a vendor’s technical capabilities can be difficult due to the “black box” nature of the offshore team.

 

CONCLUSION

Offshore projects are by their very nature risky undertakings. As the study findings reveal, such projects face a combination of traditional project risks as well as a set of threats that are fairly unique to the offshore environment. Unquestionably, fundamental project management skills are essential in guiding such projects. However, such skills alone are likely to be insufficient in directing offshore initiatives effectively. Unless organizations recognize the unique challenges associated with remote management in offshoring and provide appropriate training to their project managers, their initiatives are likely to face increased levels of failure risk.

Because our findings represent the input of a panel of experts with extensive offshore outsourcing experience, we believe these findings are broadly applicable across diverse project types and business contexts.

Nevertheless, we recognize that individuals in charge of offshore projects may sometimes face unique organizational settings (such as a heightened sensitivity to PR issues surrounding offshoring, or a lack of needed resources). Such distinctive circumstances will require the development of a customized risk profile for the project, that may differ from the one presented here. We hope that the set of the risk factors and the insights that were generated by the expert panel will provide a useful starting point for such managers. ^c

REFERENCES

1. Aron, R. and Singh, J.V. Getting offshoring right. Harvard Business Review 83, 12 (2005), 135–143.

2. Aspray, W., Mayadas, F., and Vardi, M. Y. Globalization and Offshoring of Software: A Report of the ACM Job Migration Task Force. ACM, NY, (2006).

3. Firms take outsourcing risks. IT Week (June 14, 2004).

4. Gopal, A., Mukhopadhyay T., and Krishnan, M.S. The role of software processes and communication in offshore software development. Commun. ACM 45, 4 (Apr. 2002), 193–199.

5. Keil, M., Cule, P.E., Lyytinen, K., and Schmidt, R.C. A framework for identifying software project risks. Commun. ACM 41, 11 (Nov. 1998), 76– 83.

6. Krishna, S., Sahay, S., and Walsham, G. Managing cross-cultural issues in global software outsourcing. Commun. ACM 47, 4 (Apr. 2004), 62– 66.

7. McCarthy, J.C. The State of Development of the IT Services Global Delivery Model. Forrester Research Inc., Cambridge, MA, 2007.

8. Schmidt, R.C. Managing Delphi surveys using nonparametric statistical techniques. Decision Sciences 28, 3 (1997), 763–774.

9. Schmidt, R., Lyytinen, K., Keil, M., and Cule, P. Identifying software project risks: An international Delphi study. J. Management Information Systems 17, 4 (2001), 5– 36.

10. Stone, B. Should I stay or should I go? Newsweek 143, 16 (2004), 52– 53.

11. Wallace, L. and Keil, M. Software project risks and their effect on outcomes. Commun. ACM 47, 4 (Apr. 2004), 68– 73.

 

CHARALAMBOS L. IACOVOU ( [e-mail]) is an associate professor of management at the Babcock Graduate School of Management at Wake Forest University in Winston-Salem, NC. ROBBIE NAKATSU ( [e-mail]) is an associate professor of computer information systems at the College of Business Administration at Loyola Marymount University in Los Angeles, CA.

Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. To copy otherwise, to republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee.

© 2008 ACM 0001-0782/08/0600 $5.00