Key factors for successful offshore outsourcing projects

University essay from Göteborgs universitet/Företagsekonomiska institutionen

Author: Mikael Holmberg; Bäckman Philip; Tonnby Daniel; [2007-04-18]

Keywords: ;

Abstract: Background: In the last decade the IT outsourcing industry has faced substantial changesdue to the digital revolution and the dramatic fall in international telecommunications. Thenew situation has created a trend in IT outsourcing called offshoring. The term offshoringrefers to outsourcing to another country, commonly low-wage countries such as India orChina. The authors of this thesis were contacted in November 2006 by representatives ofour case-company and learned that they were interested in reviewing their IT offshoringprojects. 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 andteam members working with offshore projects face in their daily work and to make suggestions on how theseproblems can be dealt with.Perspective: The thesis is a case study of an IT-company and is therefore strongly tied tothe work-processes of the specific case-company. The focus is on IT outsourcing offshorewith its specific problems, such as non-collocated teams etc. Thus, it does not focus on thecommon problems of working together in a team and problems with lack of goodmanagement.Method and Theory: The thesis is conducted with exploratory, hermeneutic and abductiveapproaches. The primary data is collected from interviews with the personnel and thesecondary data is gathered from literature and journals. The thesis has been conducted withfocus on the factors discussed within the Offshore Project Success Model derived fromscholars Balaji and Ahuja.Result, Analysis and Conclusion: When interviewing the personnel different aspects anddifficulties connected to offshore operations appeared, especially with the planning,implementation and knowledge integration phase of the offshore resources. It seemed likethe process had been carried out without clearly defined targets and evaluations, which hasresulted in uncertainties at the management level considering the success-level of theprojects. 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 presentingrecommendations for solving them.Suggestions for further research: Cost-calculations and risk management connected tooffshore operations or a social study of the employees’ attitudes and reactions towardsoffshore operations would be of interest.

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