Outsourcing in Global Software Development: Effects of Temporal Location and Methodologies
Mark Looi, Marc Szepan

Abstract
Developing software globally using outsourced resources has become a common practice, with project teams often distributed in different time zones. In this study, we focus on customers that contract software development to vendors in temporally near shore or far offshore locations. We conducted a survey to determine the effect of temporal distance on overall success, costs, project management effort, schedule, quality, communication problems, and other outcomes of interest to managers. In the survey of 80 customers and interviews with six of them, we also investigated the effect of software development methodology on the same outcomes. The results show that near shore development is advantageous for overall success, reduced PM effort, maintaining schedule, higher quality, and engendering fewer communication problems. Development methodology appears to only influence higher costs and is not a significant determinant of success in outsourced software development, while structured methodologies can be more effective at keeping costs aligned to budgets. Thus, managers should have tempered expectations about the broad applicability of Agile methods to outsourced farshore projects, since Agile requires intense synchronous communication. We assess our findings in the context of prior GSE research and provide practical advice for customers of outsourced global software development, chief of which is to favor nearshore for communication-intensive or Agile projects.

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