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Fair comparison of developing software in different locations: dynamic decision model
Blekinge Institute of Technology.
Kristianstad University, Faculty of Business, Avdelningen för ekonomi. Blekinge Institute of Technology.
2019 (English)In: World Review of Intermodal Transportation Research (WRITR), ISSN 1749-4729, E-ISSN 1749-4737, Vol. 8, no 2Article in journal (Refereed) Published
Abstract [en]

While offshore software development is frequently looked at in simple economic terms, assumed benefits are not always achieved. This can be attributed to unexpectedly high transition costs and a number of extra costs for maintaining a sourcing strategy. When offshoring fails, companies need to revisit their decision. In this paper, an analytical model is proposed to support evaluation of offshoring strategies and decision options. The model focuses on value comparison, and treats outcomes of offshoring relationships more fairly and realistically than a naïve salary comparison. The model is a development of models with extensions motivated by lessons learned from two empirical cases. The model is designed to consider more decision outcomes than previously suggested. In contrast to current practice focusing on economic profits from the salary differences between onshore and offshore, we focus on the differences between expected and realised outcomes by analysing strategic benefits created by options and measuring the same time-value. Finally, consequent decision situations provide a dynamic view on supporting chains of decisions.

Place, publisher, year, edition, pages
2019. Vol. 8, no 2
Keywords [en]
offshoring decisions, cost calculation, transaction cost economics, opportunity costs, options, cost/benefits, software development
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:hkr:diva-19249DOI: 10.1504/WRITR.2019.099131OAI: oai:DiVA.org:hkr-19249DiVA, id: diva2:1307759
Available from: 2019-04-29 Created: 2019-04-29 Last updated: 2019-04-29Bibliographically approved

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Numminen, Emil

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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf