Key factors for successful offshore outsourcing projects

Abstract

Background: In the last decade the IT outsourcing industry has faced substantial changes due to the digital revolution and the dramatic fall in international telecommunications. The new situation has created a trend in IT outsourcing called offshoring. The term offshoring refers to outsourcing to another country, commonly low-wage countries such as India or China. The authors of this thesis were contacted in November 2006 by representatives of our case-company and learned that they were interested in reviewing their IT offshoring projects. The following questions were asked: – What specific problems occur when working with offshoring projects? – What factors are central for an efficient work-process in offshoring projects? – How can the problems at the case-company office be dealt with? Purpose: The purpose of this thesis is to map out the problems and challenges that managers and team members working with offshore projects face in their daily work and to make suggestions on how these problems can be dealt with. Perspective: The thesis is a case study of an IT-company and is therefore strongly tied to the work-processes of the specific case-company. The focus is on IT outsourcing offshore with its specific problems, such as non-collocated teams etc. Thus, it does not focus on the common problems of working together in a team and problems with lack of good management. Method and Theory: The thesis is conducted with exploratory, hermeneutic and abductive approaches. The primary data is collected from interviews with the personnel and the secondary data is gathered from literature and journals. The thesis has been conducted with focus on the factors discussed within the Offshore Project Success Model derived from scholars Balaji and Ahuja. Result, Analysis and Conclusion: When interviewing the personnel different aspects and difficulties connected to offshore operations appeared, especially with the planning, implementation and knowledge integration phase of the offshore resources. It seemed like the process had been carried out without clearly defined targets and evaluations, which has resulted in uncertainties at the management level considering the success-level of the projects. The conclusion of the thesis focuses on three main problem areas, namely; team/team communication, corporation/office communication and education and implementation support, discussing the certain problems connected to these areas as well as presenting recommendations for solving them. Suggestions for further research: Cost-calculations and risk management connected to offshore operations or a social study of the employees’ attitudes and reactions towards offshore operations would be of interest.