Impact of offshore on the UK Software Companies

In Europe, UK companies are more inclined to make use of off-shoring, as they have to face international competition. Many UK organisations have software developed from other countries such as Microsoft applications in the USA, SAP software in Germany and so on. In a research done by Forrester predicted that by 2009, UK will account for more than 75% of £2.38 billion of Western European spending on off-shoring and that IT services provided from overseas will grow from £726 million in 2004 and will keep increasing 27% each year.

India’s most successful outsourcing consultant, Wipro gets 12% of its work from UK companies (The Economist, 04-03-2004) and in 2012 it has achieved the award Project of the year 

Many European countries want to offshore their work because of:

• Low wages in developing countries.
• flexible labour laws in the UK.
• English speaking cheap labour available.

FACTORS AFFECTING SOFTWARE DEVELOPMENT: Trust Factor

The first major challenge to offshore development is the factor of trust. Trust is an important aspect of interpersonal (Boon, Holmes, 1991) as well as inter-organisational relationship (Ring, Ven, 1994). But it is difficult to develop a relationship with unknown foreign partners that are timely and geographically distant  mainly because the companies do not have any relationship beyond the project itself.

Moreover trust can be difficult to establish as most projects are developed through structural mechanisms, which include deliverables, penalty clauses and reporting arrangements whereas in-house development relays more on trust rather than on details structured reporting (Lander, Purvis, McCray and Leigh, 2004).

While realising the difficulty in establishing trust in offshore project it is still needed in order to cooperated with foreign companies as distrust can hurt the performances whereas trust improves the performance. As distrust leads to finger pointing and each organisation starts focusing on how other organisations may have hurt the project.

Issues in trust have led some organisations to create their own software development centres in countries like India, China, Russia and Brazil.

References: 

Boon, S., and Holmes, J. The dynamics of interpersonal trust: Resolv- ing uncertainty in the face of risk. In Cooperation and Prosocial Behav- ior, R. Hinde, and J. Groebel, Eds. Cambridge University Press, Cambridge, U.K., 1991, pp. 190–211.

Lander, Maria Cristina, Russell L. Purvis, Gordon E. McCray, and William Leigh. "Trust-building mechanisms utilized in outsourced IS development projects: a case study." Information & Management 41, no. 4 (2004): 509-528.

Ring, P., and Van de Ven, A. Developmental processes of cooperative interorganizational relationships. Acad. Mgt. Rev. 19, 1 (Jan. 1994),90–118.

FACTORS AFFECTING SOFTWARE DEVELOPMENT: People Factor

For any software, people are the primary factor (Phillips, 2004). In fact the “people” factor is so important that Software Engineering Institute has developed a People Capability Maturity Model (People-CMM) in order to improve the ability of an organization to attract, motivate, develop and organise the work force needed to achieve their business objectives (Curtis, Hefley and Miller, 2001)

The challenge with people is that yet importance of people in software development process has been agreed upon but often people are taken for granted (Pressman, 2010). Managers argue that people are important but their action defer. Another challenge is that people are highly unpredictable so in order to have a successful product we need to have a balance between the wants and needs of the people (Buettner, Millette, 2010).

Reference:

Buettner, Douglas J., and Chad Millette. From Projects to People: Shifting the Software Acquisition Paradigm. AIR FORCE MATERIEL COMMAND WRIGHT-PATTERSON AFB OH, 2010.

Curtis, B., W.Hefley , and S. Miller, People Capability Maturity Model, Addison- Wesley , 2001.

Phillips, Dwayne. The software project manager&s handbook. IEEE computer society, 2004.

Pressman ,Roger S., Software Engineering: A Practitioner's Approach, McGraw-Hill Higher Education; 7th edition (2010 )ISBN: 0073375977