Outsourcing in Global Software Development: Effects of Temporal Location and Methodologies

TL;DR

This study examines how temporal location and development methodologies impact success, costs, and communication in global outsourced software projects, highlighting nearshore advantages and methodology effects.

Contribution

It provides empirical evidence on the effects of nearshore versus offshore locations and methodologies on project outcomes in global software development.

Findings

Nearshore development improves success, quality, and communication.

Development methodology mainly affects project costs.

Nearshore is recommended for communication-intensive or Agile projects.

Abstract

Developing software globally using outsourced resources has become a common practice, with project teams often distributed in different time zones. In this study, we focus on customers that contract software development to vendors in temporally nearshore or far offshore locations. We conducted a survey to determine the effect of temporal distance on overall success, costs, project management effort, schedule, quality, communication problems, and other outcomes of interest to managers. In the survey of 80 customers and interviews with 6 of them, we also investigated the effect of software development methodology on the same outcomes. The results show that nearshore development is advantageous for overall success, quality, reduced PM effort, maintaining schedule, higher quality, and engendering fewer communication problems. Development methodology appears to only influence higher costs. We assess our findings in the context of prior GSE research and provide practical advice for customers of outsourced global software development, chief of which is to favor nearshore for communication-intensive or Agile projects.