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Management Issues Affecting Outsourcing of Software Projects in Pakistan’s Software Industry

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Management Issues Affecting Outsourcing of Software Projects in Pakistan’s Software Industry

Abstract

Software Projects Outsourcing is used extensively by different organizations as a sourcing strategy today and it becomes a crucial issue in achieving specific objectives. This paper studies the impact of management issues on the effectiveness of outsourcing of software projects in industries of Pakistan. Outsourcing is an imperative trend in now a day’s business environment and is vital for us to well comprehend what factors influence more on outsourcing. On basis of the literature review, this paper recognizes the main management issues that the client organization needs to possess to efficiently outsource software projects. Quantitative data from different several software fields is utilized to support the findings that what are the more influencing factors. Different factors are identified and highlighted to catch the weaknesses that occur during successful outsourcing of projects.

Keywords— Outsourcing, Management Issues, Software Projects

Introduction

In the global performing world nowadays, organizations are increasing their processes from different places in all over the world and many people in different organizations are employed for them. The companies working in global companies are experiencing new job definitions, internal/external relationships, and correlation strategies which are: business strategy, and software/IT strategy [1]. One of the approaches among all raise up as the significance of globalization is outsourcing. Many organizations require outsourcing for the performance of different functions so organizations need to hire third parties [2]. Several researchers have studied outsourcing. Smith and Angele in [2] has been completed the utmost projecting work on which they define the outsourcing requirement and its various viewpoints. In [3] Marvin Taylor defined that outsourcing has a significant effect on the software industry. The author also proposed the global trends of outsourcing.

In [4] Bott demonstrated the benefits of outsourcing in different organizations, particularly in IT-related projects. The authors proposed the benefits of outsourcing related to cost savings and quality improvement. Authors represented the vital role of outsourcing to complete organizational activities [5]. Outsourcing at the same time has both success and failure outcomes. The authors [5] also described the strategic issues related with software project management, organization, choices on software outsourcing and it impacts on complete firms. They similarly highlight that the scholars inside the pitch of handling software project assets find the reflection organizational concepts suitable in their research.

Organizations are spending a lot on project management for the successful completion of their software projects. Outsourcing is a key strategy for different organizations of Pakistan. The software industry is changing dramatically and people are required for a set of skills. Project managers need experts on managing change, cultural communication, managing business know-how by offshore teams, and development of processes for managing global projects. In this era of changing environment, it is significant to maintain effective project management functions addressing quality management. In this paper, we identify the top most factors that influence software projects during outsourcing in Pakistan software industries.

The organization of the paper as follows: Section 2 related work or literature is presented. In Section 3, the Theoretical framework is proposed and presented. In Section 4, experimental results were discussed. In Section 5, the results section is presented. Finally, in Section 6, the conclusion is presented.

Literature Review

In [6] author proposed and described outsourcing as a third party that provides assets, human resources, and different managerial decisions and duties to the primary company. The authors highlighted in [7] the relationship between the buyer and provider companies. In [8] authors specified that the outsourcing of software projects is affected by the quality of the relationship between buyer and provider companies. The recommendations of researchers that organizations require to reflect approximately variations in their calculated positioning when they want to outsource and how to organize a productive association with the supplier company. Outsourcing, when unified into the business approach, allows companies to decrease costs, to emphasize on essential business activities, and to probably have access to a comparatively reasonable skilled effort.

In [9] Simon described that if you are installing a computer system you might have an IT person and outsource beyond that. The benefit is that the price is contracted. In [10] authors indicated that typically the failure of software projects is attributed to poor management In [10] authors proposed 50 different management factors that affect the successful outsourcing of software projects. In [11] authors described 24 different factors that have an impact on the outsourcing of software projects. To find critical features compilation of all the factors was formed. In [14] author discussed 17 issues that happen during IT offshoring service projects which turn potential benefits into losses. The authors described best practices to managing and mitigating these critical issues. The author highlight 4 main issues faced all companies developing outsourced projects [15].

Filipe and Delfina explored the various builds that may contribute toward the foundation of systems outsourcing jeopardies: they defined 17 subjects on the Customer-Side Undesirable Significances. 44 influential factors from Customer-Side Negative Outcomes, 104 Customer-Side Dangers, and 55 elements that have affected the study of the studied literature on Info. System outsourcing threats. The examination of the collected data resulted in the formation of 127 extenuation activities [16].

In another study, [17] Author explored 26 different Critical factors for the formulation of the Software outsourcing partnership model. 14 Out of these 26 elements were found as critical success factors (CSFs) grounded on the measure of > = 30% incidences in the collected research studies. In this study, [18] author formed a conceptual framework for evaluating outsourcing’s effect in IT projects, this framework is based on four major perspectives: Relationship quality, Experience, psychic & culture. Lili et al. [19] found 79 different influential factors on tactical IT system development outsourcing from customers’ viewpoint & categorized them in Organizational environment, Team, Financial Legal, scope & requirements, planning & control, User, Complexity, execution & Contract. Authors in [20] identified 09 certain terms that can be deliberated as likely association factors in the IT outsourcing affiliations. Joao in [21] highlighted 11 drivers for outsourcing & 16 causal identifiers for affecting outsourcing in IT/IS projects.

Framework

In this research, the theoretical framework designates the potential effect that the procuring firm can have on main factors/issues. The main reason behind this research is to evaluate the potential factors that might raise certain glitches for streamlining the process of software projects outsourcing. We went through various research studies and found that Alborz et al. [10] discovered the 50 different management controllable factors which can affect the success of software projects. Now; we present the list of identified factors affecting management associated with outsourcing of software projects in Pakistan’s Software Industry:

Research Methodology

This section highlights the particulars of the whole procedure carried out: As stated above, this research study is based on a theoretical framework; therefore a detailed literature review is followed out for the evaluation of potential factors. Furthermore, a quantitative survey-based approach is derived that is based on the key factors/issues of software project outsourcing discussed in the Literature Review. After outlining the interrogations for the structured questionnaire; we computed & analyzed the results, to conclude the nature of the problem. It is important to mention here that the data is accumulated by the experiences of in-field Employees, Team leaders, and Project Managers. The data collected from different parties was then recorded and analyzed for the conclusion. The research structure for this study comprises of three major phases: (1) Identifying the management issues for the outsourcing of software projects. (2) A web-based survey is carried–out in the Industry sector of Pakistan to get the most realistic outcomes. (3) Compilation of findings of the critical attributes; of all the relevant factors associated with different organizations. And the selection of the most important and crucial factors from the list of factors found from literature; (4) A concise list of most potential factors is generated. The following diagram illustrates the practice, Fig. (1)

The Research Framework.

Experimental Data

In the survey’s experiment, we evaluated the top factors of outsourcing that are affecting the Pakistan software industries. The sample data for evaluation is collected from 18 different organizations by conducting a survey. We then analyzed the responses to check the issues of different organizations. This paper contains several research questions to gather responses in outsourcing management issues. The questionnaire is structured into seven segments to acquire statistics. 18 organizations answered to our survey questionnaire, and more than 40% were government organizations. 50% were private organizations and 10 % were overseas-based private organizations. The details are further illustrated in Figure 1

  • Category respondent grouped
  • Category
  • Response
  • %age
  • Government Sector
  1. 8
  2. 33.33
  • Private organization
  1. 12
  2. 50
  • Foreign-based private organization
  1. 4
  2. 16.67
  • Total
  1. 24
  2. 100

Category respondents grouped.

The response rate from software houses was 45.8 % which was the highest response rate. The respondent group from the different industrial sectors is represented in following Table II. Further details are shown in Figure 2.

Lack of top Management Support

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 13
  2. 45.8
  • Telecommunication
  1. 5
  2. 20.9
  • Automobiles
  1. 2
  2. 8.3
  • Banking & Insurance
  1. 3
  2. 12.5
  • Defense Industry
  1. 3
  2. 12.5
  • Total
  1. 24
  2. 100

Industrial Category Respondents group

Results And Analysis

The result deduced from the previous sections is to highlight the factors that are affecting the successful outsourcing of software projects. Different companies have different identifications so, they face different problems. This paper highlighted several factors/issues of management while outsourcing and conducted a survey based on factors that come from the literature review. On the basis of identified factors, results are calculated for each industry to assess which factor is more influential in that specific industry. The results are shown in the graph that the high turnover of vendor employees is more influencing on the outsourcing of software projects in Pakistan’s industry. The results represented below are the basic conclusion of our finding that we have done in this research. The questionnaire results are displayed in Tables. In addition, details are further explained in Figures.

Lack of top Management Support

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 8
  2. 33.33
  • Telecommunication
  1. 4
  2. 16.67
  • Automobiles
  1. 7
  2. 29.16
  • Banking & Insurance
  1. 4
  2. 16.67
  • Defense Industry
  1. 1
  2. 4.17
  • Total
  1. 24
  2. 100

Lack of top Management Support.

As shown in Table III, 33.33% (Software Houses & IT Consultancy) respondents from participants (industrial organizations) stated that there is a lack of top management support in outsourcing of Pakistan’s software industry. Although there was also a larger number of participants (automobiles) who find that there is an absence of management support. Further details are explained in Figure 4.

Information sharing issues

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 5
  2. 20.83
  • Telecommunication
  1. 3
  2. 12.5
  • Automobiles
  1. 5
  2. 20.83
  • Banking & Insurance
  1. 4
  2. 16.67
  • Defense Industry
  1. 7
  2. 29.17
  • Total
  1. 24
  2. 100

Information sharing issues

Table IV sum up the views on the information hiding issues of vendors. Many organizations stated that there are the lowest issues. While most of the responses represented that vendors not sharing the right information creates a lot of problems. Further details can be seen in Figure 5.

Language barriers in Project Communications

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 9
  2. 37.5
  • Telecommunication
  1. 4
  2. 16.67
  • Automobiles
  1. 3
  2. 12.5
  • Banking & Insurance
  1. 6
  2. 25
  • Defense Industry
  1. 2
  2. 8.33
  • Total
  1. 24
  2. 100

Language barriers in Project Communications

Table V shows Language barriers in Project Communications are the most influential factor highlighted by the Software Houses & IT Consultancy organizations as Figure 6 shows the details.

Lack of continuous, face-to-face interactions across team members

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 2
  2. 8.33
  • Telecommunication
  1. 5
  2. 20.83
  • Automobiles
  1. 6
  2. 25
  • Banking & Insurance
  1. 7
  2. 29.17
  • Defense Industry
  1. 4
  2. 16.67
  • Total
  1. 24
  2. 100

Lack of continuous, face-to-face interactions across team members

Table VI demonstrates that the Lack of continuous, face-to-face interactions across team members is the top factor emphasized by Banking & Insurance organizations. Further details can be seen in Figure 7.

Lack of business know-how by offshore team

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 3
  2. 12.5
  • Telecommunication
  1. 5
  2. 20.83
  • Automobiles
  1. 6
  2. 25
  • Banking & Insurance
  1. 3
  2. 12.5
  • Defense Industry
  1. 7
  2. 29.17
  • Total
  1. 24
  2. 100

Lack of business know-how by offshore team

Table VII sums up the results for lack of business know-how by the offshore team and showed Defense Industry as the most highlighted factor. details are provided in Figure 8.

Telecommunication and Infrastructure Issues

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 6
  2. 25
  • Telecommunication
  1. 7
  2. 29.16
  • Automobiles
  1. 4
  2. 16.67
  • Banking & Insurance
  1. 3
  2. 12.5
  • Defense Industry
  1. 4
  2. 16.67
  • Total
  1. 24
  2. 100

Telecommunication and Infrastructure Issues

Table VIII shows telecommunication and infrastructure issues are the most cited factors in telecommunication organizations. Further details can be seen in Figure 9.

The difference in development methodology/ processes

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 6
  2. 25
  • Telecommunication
  1. 5
  2. 20.83
  • Automobiles
  1. 5
  2. 20.83
  • Banking & Insurance
  1. 2
  2. 8.34
  • Defense Industry
  1. 6
  2. 25
  • Total
  1. 24
  2. 100

The difference in development methodology/ processes

Table IX shows software houses & IT consultancy, as well as the defense industry, highlighted the difference in development methodology/ processes as the most cited factor. Further details can be seen in Figure 10.

Lack of project management know-how by client

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 3
  2. 12.5
  • Telecommunication
  1. 4
  2. 16.67
  • Automobiles
  1. 5
  2. 20.83
  • Banking & Insurance
  1. 7
  2. 29.17
  • Defense Industry
  1. 5
  2. 20.83
  • Total
  1. 24
  2. 100

Lack of project management know-how by client

Table X shows lack of project management know-how by clients is the top factor highlighted by Banking & Insurance organizations. Figure 11 shows the details.

Organizational culture

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 3
  2. 12.5
  • Telecommunication
  1. 7
  2. 29.16
  • Automobiles
  1. 4
  2. 16.67
  • Banking & Insurance
  1. 6
  2. 25
  • Defense Industry
  1. 4
  2. 16.67
  • Total
  1. 24
  2. 100

Organizational culture

Table XI shows organizational culture is the top factor highlighted by Telecommunication organizations as Figure 12 shows the details.

High turnover of vendor employees

  • Industrial Category
  • Response
  • %age
  • Software Houses &
  • IT Consultancy
  1. 7
  2. 29.16
  • Telecommunication
  1. 4
  2. 16.67
  • Automobiles
  1. 4
  2. 16.67
  • Banking & Insurance
  1. 6
  2. 25
  • Defense Industry
  1. 3
  2. 12.5
  • Total
  1. 24
  2. 100

High turnover of vendor employees

Table XII shows a high turnover of vendor employees is the top factor highlighted by Software houses & IT consultancy as Figure 13 shows the details.

Conclusions

The basic purpose of the research work was to highlight the factors that are affecting the successful outsourcing of software projects. Different companies have different identifications so, they face different problems. This paper highlighted several factors/issues of management while outsourcing. A Survey was conducted, based on factors that come from the literature review, and on basis of that factors calculated results of different industries facing different problems while outsourcing their projects. The result is summarized into graphs and tables to indicate the different management issues that arise in the industries of Pakistan during outsourcing.

For future work, we can extend our research to overcome and handle the management issues during the outsourcing of different projects.

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