Software development outsourcing risk factors and severity level: An empirical investigation

  • Authors

    • Alawiyah Abd Wahab
    • Jamaiah Yahaya
    • Faudziah Ahmad
    • Siti Farina Zakaria
    • Abdul Razak Hamdan
    • Aziz Deraman
    2018-08-17
    https://doi.org/10.14419/ijet.v7i3.28.20955
  • Software Development Outsourcing, Risk Factors, Criticality Level, Empirical Study.

  • Software development outsourcing has become an important business strategy both in the public and private sectors not only in Malaysia but also worldwide. This is because it has the potential of lowering the operation cost, improving the quality of service and gaining access to advanced technological expertise. Although outsourcing can be very beneficial, it entails risks that could cause significant loss if organizations fail to identify and manage them. This study aims to identify and assess the severity level of risk factors involved in an outsourced software development project from the practitioners’ perspective. Therefore, a survey has been conducted with 132 practitioners from the public sectors in the selected states within the northern Peninsular Malaysia. The survey included the risk factors identified in a thorough literature review study. The total mean value indicated of six main risk factors, four main risk factors are very highly critical.

     

  • References

    1. [1] P. Fersht, J. Snowdon and H. Santosh, The HFS Market Index – IT Services and BPO Market Size and Forecast 2016–2020. HFS Research, https://www.hfsresearch.com/market-analyses/emea-it-services-and-bpo-market-size-and-forecast-2016-2020 (2016).

      [2] A. Sulhi, 2017 to be Promising and Disruptive for Global Business Services. http://www.theedgemarkets.com/article/2017-be-promising-and-disruptive-global-business-services-%E2%80%94-outsourcing-malaysia (2017).

      [3] R. Gonzalex, J. Gasco, J. Llopis. Information systems outsourcing reasons and risks: A new assessment. Industrial Management and Data Systems, 110(2) (2010) 284-303.

      [4] S.U. Khan, M. Niazi, R. Ahmad. Empirical investigation of success factors for offshore software development outsourcing vendors. IET Software, 6(1) (2012) 1-15.

      [5] T.P. San and A. Abd Wahab. A systematic literature review on risk factors in software development outsourcing. Proceeding of the International Conference on ICT for Transformation 2016, Sabah, Malaysia. Azizah Ahmad (eds.), (2016) 154-158.

      [6] G. Johnson, K. Scholes and R. Whittington. Exploring corporate strategy: Text and cases, Prentice Hall, Chicago (2008).

      [7] B.W. Boehm. Software Risk Management: Principles and Practices. IEEE Software, 12 (1991) 32–41.

      [8] L. Loh and N. Venkatraman. Determinants of information technology outsourcing: A cross-sectional analysis. Journal of Management Information Systems, 9(1) (1992) 7-24.

      [9] S. Dhar and B. Balakhisnan. Risks, Benefits and Challenges in Global IT Outsourcing: Perspectives and Practices. Global Information Management, 14(3) (2006) 39-63.

      [10] B.A. Aubert, M. Party and S. Rivard. Managing the risk of IT outsourcing. Proceedings of the 32nd Hawaii International Conference on System Science (1998).

      [11] H. Hooman and R. Hassan. Classification and Analysis of Risks in Software Engineering. World Academy of Science Engineering and Technology, (2009) 446-452.

      [12] O. Ishenko, Outsourcing of software development. Humboldt University of Berlin, Faculty of Economics, Berlin http://www.seoresearcher.com/research/Outsourcing-of-Software-Development.pdf (2005).

      [13] T. Jelassi and S. Modwel. The sustainability of India’s comparative advantage in IT offshore outsourcing. Proceedings of the Fourteenth European Conference on information Systems (2006) 1–11.

      [14] M.A. Afipudin, Risiko dan Struktur Pembahagian Risiko (SPR) Dalam Projek Pembinaan, Bachelor Thesis, Universiti Teknologi Malaysia, Johor, 2005.

      [15] K.J. Park, Exploring the influence of vendor reputation in IT outsourcing decisions: A transaction cost perspective. Proceeding of the 45th Hawaii International Conference on System Sciences, 5002–5010 (2012).

      [16] A. Aman and E.Z.E.A. Rahman. Managing relational risks in accounting outsourcing: Experiences of small firm. World Applied Sciences Journal, 15(1) (2011) 56-62.

      [17] N. Zhang. An analysis framework of factors influencing China software and information service offshore outsourcing. IEEE Fifth International Conference on Information Technology, 875–880 (2008).

      [18] R.T. Nakatsu and C.L. Iacovou, A comparative study of important risk factors involved in offshore and domestic outsourcing of software development projects: A two-panel Delphi study. Information and Management 46 (2009) 57-68.

      [19] S.R. Syed Aris, A. Mohamed and N.H. Arshad, Preliminary study on risk management in e-government outsourcing projects. Proceedings of the 6th WSEAS International Conference on e-activities, (2007).

      [20] J.H. Yahaya, N.F. Hamzah, and A. Deraman, Evaluating vendor's performance in outsource software development risks using analytic hierarchy process technique. Software Engineering Conference, 61-66 (2014).

      [21] J.H. Yahaya, N.F. Hamzah, A. Deraman and Y.Y. Jusoh. Risiko pembangunan sistem secara penyumberluaran: Pengujian menggunakan teknik proses analisis berhirarki. Jurnal Technology (Science and Engineering), 72(1) (2015) 33-43.

      [22] N. Levina and J.W. Ross. From the vendor's perspective: Exploring the value proposition in information technology outsourcing. MIS Quarterly, 27(3) (2003) 331-364.

      [23] A.T. Chatfield and P. Wanninayaka, IT offshoring risks and governance capabilities. 41st Hawaii International Conference on System Sciences (2008).

  • Downloads

  • How to Cite

    Abd Wahab, A., Yahaya, J., Ahmad, F., Farina Zakaria, S., Razak Hamdan, A., & Deraman, A. (2018). Software development outsourcing risk factors and severity level: An empirical investigation. International Journal of Engineering & Technology, 7(3.28), 8-11. https://doi.org/10.14419/ijet.v7i3.28.20955