Outsourcing of International Software Development

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Table of Contents

Background
Ethical issues in outsourcing of international software development
Solutions to ethical issues
Conclusion
Reference List

Background

The information technology (IT) industry is a non-dispensable part of modern society, with information and communications technologies being integral parts of many businesses globally. The core product in information and communication technology is software. Its production has therefore become a crucial industry concern. Having been a closely guarded internal matter in the earlier stages of industry growth –where companies dedicated whole departments for the purpose- some companies deviated from this practice and instead sourced their software to companies that specialized in its production. (This was known as in-house software development). Organizations in the industry also exercised the option of contracting outsiders to develop their software (Huckvale et al, 2003, pp. 23).

The main reason these companies opted for another avenue away from in-house development was staffing. The early stages of the computing industry leading to the late 1980s saw companies that had their software development departments undergo a phenomenal rise in the developer staff. This is because the software industry was immature with the products being inflexible for usage in the heterogeneous mainframes framework. Therefore, each company had to develop software for its own mainframes. In this regard, they had to increase their developing staff. The growth in the level of software used as the 1990s approached coupled with the increased complexity of software led to a further increase in the software teams. The resulting hike in payroll budgets and infrastructure costs became too expensive for individual companies whose core activity was not software development (Ishenko 2005, pp. 56).

By 1994, companies were increasingly contracting software development and other IT tasks in a bid to save on expenditure and management effort. Software outsourcing came to be defined as ‘the contracting out of the development, planning, management, training, maintenance, or operation of software services, skills, products or applications’. Outsourcing took the place of in-house development and became a fast-growth industry (Sahay et al 2003, pp. 67).

The industry comprised in-country and offshore outsourcing. The latter sect sector was involved contracting companies to carry out the software development. Many companies especially with the growth of globalization picked up the trend. Globalization had increased competition in the computing industry with other effects being: lower costs, faster market delivery, highly qualified personnel, increased quality service quality, and customer proximity. Some aspects of the software development function made it suitable for offshore outsourcing: the ability for the job to be done from a distance; the jobs’ heavy information load; high inter-country wage difference; and the repetitive nature.

Near-shore outsourcing is a version of offshore outsourcing whereby the countries targeted are culturally and geographically close to the outsourcer’s mother country. The fact that software development companies are able to supplement their income with outsourcing contracts greatly pushes the practice. The client companies are also able to free up their resources for the core operations. Another factor that has boosted the growth of offshore software development is the opportunity for the developers to cash in on their varied expertise and solutions from potential clients (Jones 1994, pp. 2-34).

The software development process is transferred into the hands of professionals thereby avoiding procedural and administrative mistakes that are prevalent in the process. This also contributes to the reduction of development time while the providers are able to develop their efficiencies through routine tasking. Offshoring is also in line with the increasingly practiced concept of business process outsourcing whereby non-core operations are contracted allowing for focus on primary business activity.

Finally, offshore outsourcing of software development allows for access to world-class capabilities even by small businesses (Nicholson 2004, pp. 17).

Ethical issues in outsourcing of international software development

One of the major ethical issues in the offshore outsourcing of software development is the ensuing conflict of cultures. This is worsened by the lack of face-to-face contact, which complicates the understanding and efficient management of the opposing cultures. The inherent difficulty is due to the reason that culture constitutes many aspects like; language, tradition, values, and beliefs (Borchers 2003, pp. 32).

As an ethical problem, the mismanagement of cultural differences occurs when the outsourcing clients are not privy to the developers’ cultural behavior and beliefs. They only focus on getting their work done, yet there exist cultural differences that are pertinent to management. Gerard Hendrick Hofstede, a Dutch organizational sociologist, profiled these cultural differences in five dimensions. One of these dimensions, the power-distance aspect describes the extent to which the less powerful members of the organization deal with biased distribution of power. Some cultures for instance; Australian, Austrian, Danish, Irish, New Zealand; are more receptive to consultative and democratic power structures, that is a small power distance. In other scenarios for instance Malaysia, it is accepted that subordinates observe the hierarchical structure of power (Gislen et al 2009, pp. 12).

Another dimension; known as ‘individualism vs. collectivism’; describes the cultural issue of the extent to which people perceive themselves apart from their group affiliations. The two opposing cultures are individualist and collectivist, the former being whereby a person is expected to hone and show their own personality and affiliations. This is as opposed to the latter whereby individuals are defined as members of a longstanding group for instance religion or profession.

‘Masculinity vs. femininity’ as a cultural variable simply describes the value attached to male and female values. The masculine cultures value competitiveness, ambition, and wealth. In the feminine cultures, however, relationships and life receive more priority as values. In yet another dimension the way people deal with uncertainty is perceived to be a substantial cultural variable. There are cultures with strong uncertainty avoidance where people prefer to work with clear and strict rules and participate in the informally structured activity. They are also characterized by low employee turnover. The flipside is cultured with weak uncertainty avoidance where people work with implicit instructions, flexible guidelines, and informal activity (Mcsweeney 2002, pp. 24)

The final dimension looks at the ‘time horizon’, that is the relevance attached to the future relative to the present and the past. In long-term-oriented cultures, future implications are of more importance, and persistence is esteemed. In short-term cultures, however, people focus more on issues that deal with the past present, preferring immediate stability, respect for tradition, and reciprocation of gestures (Hofstede, 1980, pp. 1-6).

Outsourcing client management may know about other cultural environments, yet they may go to great lengths to avoid dealing with them. This may lead to a range of undesirable situations affecting both the customer and the developer. In the case of outsourced software development, some issues have been isolated as particularly prevalent (Krishna et al 2004, pp. 22).

The yes syndrome is a cultural issue whereby the staff says ‘yes’, instead of ‘not sure’ or ’no’. This is particularly rampant in Asian cultures where they affirm to queries on the delivery sate without absolute certainty since they are more hesitant to proffer negative answers as compared to Europeans and Americans (Bellah & Burns, 2009 pp. 1-22).

Management style also becomes an issue whereby western managers do not make continuous follow-up checks considering it to represent a lack of trust. On the other hand, in other cultures lack of persistent demand for progress reports implies that the task is unimportant.

It is also apparent that the western management style focuses more on the outcome rather than behavior as opposed to an emphasis on behavioral control in other cultures, for instance, India, a major outsourcing hub. The risk-taking tendencies of people indicate that while westerners take more risks and make reasonable assumptions in a bid to complete projects on time; other cultures have to clarify everything before proceeding with a task. They deem late delivery as justifiable by unanswered queries raised by the developer.

The issue of conflict and culture also comes into play, whereby the communication of dissatisfaction is taken differently in different cultures. Westerners are found to be more confrontational and assertive as compared to other cultures’ tolerance of conflict. The expression of appreciation also differs greatly with the culture that is affiliated with the west expressing satisfaction for average performance; while others do not offer any positive feedback for work that falls below average. This may create dissatisfaction among some developers (Bellah & Burns 2009, 12).

Lastly, the way people handle their private lives in relation to work life. Keeping the two separate is preferred in some quarters where work time is fully dedicated. In the comparative scenario, workmates and time are considered part of private life with non-work issues occupying work time and space.

Solutions to ethical issues

Developers from other cultures who participate in offshore outsourcing face many ethical challenges, necessitating ways for resolving these issues to prevent conflict and disruption of the projects. The first strategy in achieving this is training, the first component of which would be pre-posting training in language, cultural practices, norms, and values. The second component would be systematic on the job cross-cultural training in a bid to impact ongoing experience while also enabling knowledge sharing among employees. This training should be two-way catering to both the developers and the client. The resulting respect and understanding would enable smooth relationships and completion of tasks (Michael et al, 2002 pp. 13). Encoding people to create personal ethical policies on culture ‘using this method which mentioned by Kallman and Grillo (pushers – mom test – TV test – market test)’ would also assist in creating a cultural understanding in the offshore outsourcing process. Developing easy language and communication frameworks to facilitate understandability and confidence in the developing staff would also assist to a large extent (Siakas 2002, pp. 5).

The staffing decisions in choice and incentives offered to management and developers have a role to play in dissolving ethically charged cultural divide issues. In the efforts of induction of staff on other cultures, it should be recognized that culture foreigners cannot achieve the cultural fluency of the indigenous people. The use of cultural bridging staff would therefore become necessary by forming teams with people rooted in both cultures. In an effort to avoid ethnic tensions, the outsourcing projects that have has racial bias should be avoided as a matter of great priority to the outsourcer. Meeting the suppliers in person would also provide leverage in defeating these cultural hurdles, with associations beyond the professional arena being encouraged. This facilitates discussion of cultural issues thereby fostering empathy and understanding.

An umbrella organization should also be initiated; overseeing relationships between software companies and suppliers, focusing on ethical matters. This organization would be responsible for creating global ethical policies guidelines with policy recommendations from cultures all over the world (Bhat, Gupta & Murthy, 2006, pp. 38-44).

The establishment of a global organization to monitor and control international software development that involves offshore outsourcing should be considered. This organization’s mandate and input would depend on two main sources. Firstly, direct monitoring of outsourcing companies’ activity. Secondly, feedback would be sourced from both suppliers and outsourcers in determining whether any ethical violations were encountered.

Conclusion

International software development outsourcing is a high-growth sector, especially in the off-shoring sector. As companies clamor for this option in a bid to make strategic savings that maximize cost advantage, ethical issues may lose their significance. Instead, companies are bound to be more focused on chasing the bottom line to the detriment of ethical concerns. Of particular interest are cultural implications of the practice, since it is virtually geopolitically unrestricted. There would emerge hostilities from mismanagement of cultural differences that would not only affect the companies’ operations but also strain international relations. The recommended analyses of situations and solutions posed thereof should therefore be attended to and applied.

There are recommended ways of approaching problems and challenges in cross-border software outsourcing structures. Apart from the strategic choice of projects, relationships management and staffing best practices have been recommended. This is based on the increasing realization that globalization does not imply homogeneity of culture but necessitates tackling cross-cultural issues arising. This will result in more effective business operations in offshore outsourcing of software development and increased cross-cultural understanding in the contemporary world.

Reference List

Bellah, J. & Burns, J. R., 2009, Examining Solutions to Challenges in Offshore Software Development: The Perspective of a SME with a Captive Development Office in India. Texas. Rawls College of Business Administration.

Bhat, J. M., Gupta, M., & Murthy, S. N., 2006. Overcoming Requirements Engineering Challenges: Lessons from Offshore Outsourcing. IEEE Software, Vol. 23, No. 5, pp. 38-44.

Borchers, G., 2003. The Software Engineering Impacts of Cultural Factors on Multi-cultural Software Development Teams. In Proceedings of the 25th international Conference on Software Engineering (Portland, Oregon). International Conference on Software Engineering. IEEE Computer Society, Washington, DC, 540-545.

Gislen, M. & Venugopal, V., 2009, Managing the Cultural Challenges for Successful SoftwareOutsourcing. Tambaram Chennai 600 045, India. Gislen Software Pvt. Ltd.

Hofstede, G., 1980, Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills, CA: Sage Publications. Print.

Huckvale, T. & Ould, M., 2003, Process Modeling: Who, What and How. In Grover, V. & Kettenger, W.J. (Eds), “Business Process Change, Reengineering Concepts, Methods, and Technologies”. Hershey, PA: Idea Group Publishing.

Ishenko, O., 2005, Outsourcing of Software Development. Humbold Universität zu Berlin.

Jones, C. 1994. “Build, buy or outsource? Computer”, Volume 27, Issue 12. pp 77–78.

Krishna, S., Sahay, S., & Walsham, G., 2004. Managing cross-cultural issues in global software outsourcing. Communications of the ACM. Vol. 47, No. 4, pp. 62-66.

McSweeney, B., 2002. Hofstede’s Model of National Cultural Differences and their Consequences: A Triumph of faith – a failure of analysis. Human Relations, January, Vol. 55, No. 1, pp. 89-118.

Michael D. M. & Felix, B. T., 2002. Beyond Models of National Culture in Information System Research. Journal of Global Information Management, pp. 24-32

Nicholson, B., 2004. Embedded Knowledge and Offshore Software Development. Information and Organization, Vol. 14, pp. 329-365

Sahay, S., Nicholson, B. & Krishna, S., 2003, Global IT Outsourcing: Software Development Across Borders. Cambridge, Mass: Cambridge University Press.

Siakas, K. V., 2002. SQM-CODE, Software Quality Management – Cultural and Organizational Diversity Evaluation. Ph. D. Thesis. London Metropolitan University, London.

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