From Offshore Outsourcing to Offshore Insourcing: Three Stories

Document type: Conference Papers
Peer reviewed: Yes
Full text:
Author(s): Nils Brede Moe, Darja Smite, Geir Kjetil Hanssen
Title: From Offshore Outsourcing to Offshore Insourcing: Three Stories
Conference name: IEEE International Conference on Global Software Engineering (ICGSE)
Year: 2012
Pagination: 1-10
ISBN: 978-1-4673-2357-4
Publisher: IEEE
City: Porto Alegre
URI/DOI: 10.1109/ICGSE.2012.33
Organization: Blekinge Institute of Technology
Department: School of Computing (Sektionen för datavetenskap och kommunikation)
School of Computing S-371 79 Karlskrona
+46 455 38 50 00
Language: English
Abstract: Most large software companies are involved in offshore development of some sort, and now the trend is that
small and medium sized companies are also going global. While empirical research suggests that offshoring are not always successful, evidence explaining the reasons for terminated collaborations is scarce, especially for small and medium sized companies. In this paper we explore the stories of three Scandinavian medium-sized software companies that have terminated their offshore outsourcing relationships and changed to offshore insourcing arrangements. The main reason for termination was disappointing low quality of the software delivered, being caused by insufficient domain knowledge, high turnover and a lack of motivation among the remote and external developers. We apply the theory of single-loop and double-loop learning in order to explain why the companies failed to correct
the experienced problems, and the theory of escalating
commitment to explain why the companies did not correct the
failing course of action earlier. Finally we describe the change in
the choice of the principle sourcing strategy from outsourcing to
Subject: Software Engineering\General
Keywords: global software engineering, global software development, offshoring, insourcing, outsourcing, single-loop learning, double-loop learning, escalating commitment, empirical study