Offshore Vendors’ Software Development Team Configurations: An Exploratory Study

Introduction

In the last decade, the emergence of distributed software development practices has significantly transformed the landscape of Information Systems Development (ISD) within organizations in many developed economies (Sahay, Nicholson, & Krishna, 2003). This form of development is often enabled through global software outsourcing (GSO), wherein the responsibility of development is delegated to third-party vendors based in countries such as India, Ireland, and Israel. These vendors tend to have specialized expertise, access to a large pool of qualified human resources, and/or provide significant cost advantages (Davis, Ein-Dor, King, & Torkzadeh, 2006; Robinson & Kalakota, 2004; Carmel, 1999). The fact that global outsourcing is a $550 billion industry (King, 2003) with 95% of Fortune 1000 firms engaging in this practice (Ventoro, 2005) provides a firm indication that offshore outsourcing can no longer be considered an unproven model and (Robinson & Kalakota, 2004). In fact, Davis et al. (2006) characterize this as a trend that will “continue and even increase for some time” (p. 774).

Given the popularity in off-shoring of IT work amongst organizations over the last few years, researchers within the IS and related disciplines have widely investigated this topic, leading to a maturation in the state of research in this area. Much of this literature has focused on the benefits/disadvantages of this practice to the organizations outsourcing some (or all) of their IS/IT tasks to offshore vendors, examining the financial benefits and costs associated with this venture, the factors driving the organization’s decision to outsource offshore, and developing strategies for effective management of offshore projects. For example, Aron, Clemons, and Reddi (2005) examined the different kinds of strategic risk factors that affect the senior management’s decision-making in terms of developing off-shoring and outsourcing contracts; Sakthivel (2007, p. 69) explored the different “risks associated with offshore development and suggests how to manage them to achieve development objectives.” Another parallel trend in the research in offshoring has been to examine the offshoring organizations and vendors’ risks of engaging in such projects (Davis et al., 2006). Both the offshoring organization and the vendor organizations which provide the offshore services have to deal with structural, cultural, and financial risks (Davis et al., 2006), leading to the numerous studies focusing on the specific types of risk, and developing strategies for mitigating them. In addition to the wide range of research foci related to offshoring mentioned above, special issues on outsourcing and offshoring in IS academic journals stand testimony to the fact that research in this area has matured. Meyer, Tsui, and Hinings (1993) argue that when a field or a particular phenomenon of interest matures, “systematic classification” is critical for the consolidation of the “existing state of knowledge in a discipline” (p. 1179). They propose that researchers should focus on understanding the configurations of the phenomenon of interest, in an attempt to “order and make sense … by sorting things into discrete and relatively homogeneous groups” (Meyer, Tsui, & Hinings, 1993, p. 1179). Tyrakian (1968) also emphasizes that the development of configurations is necessary to help make order “out of the potential chaos of discrete, discontinuous, or heterogeneous observations” (p. 178).