Risk Bias Externalization for Offshore Software Outsourcing by Conjoint Analysis
With the steady increase of volumes of software development, most Japanese companies are interested in offshore software outsourcing. In order to find out the know-how of experienced project managers and assess the risk bias brought by vendor countries an
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Osaka Prefecture University, Graduate School of Engineering, 1-1 Gakuencho, Nakaku, Sakai, Japan, 559-8531 2 Northeastern University, School of Mechanical Engineering, No.3-11, Wenhua Road, Shenyang, Liaoning, China, 110004 {Sheng,Nakano,Kubo}@mis.cs.osakafu-u.ac.jp,[email protected]
Abstract. With the steady increase of volumes of software development, most Japanese companies are interested in offshore software outsourcing. In order to find out the know-how of experienced project managers and assess the risk bias brought by vendor countries and software types, this paper utilizes conjoint analysis method on questionnaire for project preference to externalize the tacit knowledge. After analyzing the range, maximum, minimum and average value of total utilities of three kinds of properties, we have the following findings: 1) the project property is the main item affecting success of outsourcing projects, which could lead to big success or severe failure, 2) the risk analysis result for vendors of India is different from that of China, which should be deeply investigated, 3) the risk value of middleware software is lower than that of the other two software types, which should be paid more attention to. Keywords: Offshore Outsourcing, Risk Bias, Conjoint Analysis.
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Introduction
Offshore software outsourcing refers to the outsourcing of software development work to facilities located in foreign countries [1]. The primary motivation for offshore software outsourcing is the low cost of software development in developing countries such as India, China and so on. The benefits of offshore software outsourcing also include compression of project development time, easy access to resource pool of highly skilled and experienced IT professionals and so on. In the era of globalization and specialization, outsourcing non-core activities to the third parties has become a universal tool, which helps companies to concentrate on their profit-generating activities. Offshore software outsourcing is playing an increasingly important role in the information technology strategies of major corporations. According to the steady increase of volumes of software development, most Japanese companies are interested in offshore software outsourcing and many companies have successfully carried out offshore software developments [2]. However, due to the existing of language problems, opacity of software developments K. Satoh et al. (Eds.): JSAI 2007, LNAI 4914, pp. 255–268, 2008. c Springer-Verlag Berlin Heidelberg 2008
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at the offshore site, insufficient level of control over offshore development team and so on, there are inevitably risks in offshore software outsourcing. Although those nominal risk items have been known, their magnitudes have not been measured. And the relationships among them are not known, which are important for taking trade-off in project decision. Therefore, it is an important task to measure risks and analyze their relationships for success/failure of offshore software outsourcing. In order to extract the tacit
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