Impact of Globalization and Outsourcing of Software Development.

Julie PetrusaNuzhat JilaniLoay QasemYuhuai Zhang

What Is Outsourcing?

• Outsourcing refers to the process by which companies use external providers or external entities (such as a subcontractors) to manage or maintain certain aspects of their company's business.

Communication In Outsourcing:

E-mail.

Teleconferencing.

Regular site visits by senior outsourcers.

Advantages of Outsourcing Software Development

Reduction in cost

Can save money in intangible areas such as employee benefits.

Money saved can then be reinvested in other areas.

Economic gains and increased competitiveness.

Advantages ....

Improved efficiency More control, can cancel contract if the quality is not

satisfactory. Eliminates hiring, training of staff, and dealing with

problem employees. More time to concentrate on other areas

Addition of outside expertise Brings expertise that is not available in current

employees. Productivity may increase

Disadvantages of Outsourcing Software Development

Communication problems Differences in language and cultural background. No knowledge of existing technical environment and

domain.

Difficulties in managing the outsourcing process Loss of flexibility and ability to respond quickly to

new demands because of locked contracts.

Disadvantages ….

Loss of direct knowledge within a company

Loss of loyal and knowledgeable employees.

Staff morale suffers as positions are reduced or

eliminated.

Cost versus Quality

A comprehensive quality program can be economical in the long run.

Customer satisfaction, maintenance, and support all have to be considered.

Emphasis on thorough testing.

Standardization

Capability Maturity Model: Useful to a certain extent.

Consulting companies evaluate and grade contractors according to CMM specifications.

CMM scores can be deceptive.

Important Considerations

Success stories from the source companies

Local technical expertise & project management

Proven track record on software projects similar to the outsourcing firm’s project

Separate contractors for Development and QA

Legal Issues

Legal Issues In Overseas Software Development :

Intellectual Property (IP) protection

Labor and employee rights

Export control restriction

Privacy and data security restriction

Legal Issues

Intellectual Property protection IP laws vary from country to country Examples of IP theft Suggestions:

1. understand IP laws in both countries

2. use the combination of laws and good contracts

3. protect confidential information properly.

Legal Issues

Labor and Employment RightsExport Control Restrictions -- may not be allowed to outsource overseas -- may need permission first.Privacy and Data Transfer Restrictions -- violation may lead to lawsuits, fines, or

damage business reputation.

Thanks