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  • 1.
    Smite, Darja
    et al.
    Blekinge Institute of Technology.
    Numminen, Emil
    Kristianstad University, Faculty of Business, Avdelningen för ekonomi. Blekinge Institute of Technology.
    Fair comparison of developing software in different locations: dynamic decision model2019In: World Review of Intermodal Transportation Research (WRITR), ISSN 1749-4729, E-ISSN 1749-4737, Vol. 8, no 2Article in journal (Refereed)
    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.

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