The Impact of Software Development Outsourcing on the Growth of the IT Sector in Developing Countries
Volume 4, Issue 1, January 2016, Pages: 1-8
Received: Apr. 6, 2016;
Published: Apr. 7, 2016
Views 4473 Downloads 83
Otuonye Anthony Ifeanyi, Department of Information Management Technology, Federal University of Technology, Owerri, Nigeria
Udunwa Ikenna Augustine, Department of Information Management Technology, Federal University of Technology, Owerri, Nigeria
This paper investigates the impact of Software Development Outsourcing on the growth of the IT sector in developing countries, especially Nigeria. It identifies major software outsourcing drivers and studies the relationship between them and the growth of the IT industry. The study became necessary owing to the obvious decline in IT implementation in most developing countries despite exponential growth of the sector in some developed countries of the world where outsourcing is practiced, and the attendant economic boast in those nations. From a review of existing literature focusing on selected small and medium scale enterprises and IT firms in Nigeria, five driving factors behind the adoption of software outsourcing were identified which include: cost saving/reduction, delivery time, technical skills, software quality and risk management. Randomly gathered data were analysed using multiple regression and the ANOVA test. The aim was to evaluate the collective effect of these driving factors on the level of outsourcing by the various IT firms in Nigeria and the consequent growth of the sector in the country. It was discovered that the five factors collectively contribute to software development outsourcing and the growth of the IT industry. However, it was discovered that three factors, technical skills, risk management and software quality were the most significant going by the result of the t-test. It was therefore concluded that software development outsourcing has impacted the growth of the IT sector and the level of its implementation can be further increased. Government and the organised labour should make concerted effort towards the development of IT firms by encouraging software outsourcing. This will enhance efficiency of indigenous IT firms and inspired them to obtain up-to-date skills that meet globally accepted standards. In the long run, it will translate to increase in revenue potential.
Otuonye Anthony Ifeanyi,
Udunwa Ikenna Augustine,
The Impact of Software Development Outsourcing on the Growth of the IT Sector in Developing Countries, Software Engineering.
Vol. 4, No. 1,
2016, pp. 1-8.
Alborz, S., Seddon, B. and Scheepers, R. A. (2014): Model for Studying IT Outsourcing, reprinted. Longman Nigeria PLC Lagos State, Nigeria.
Ali-Babar M., Verner, J. and Nguyen P. (2007): “Establishing and Maintaining Trust in Software Outsourcing Relationships: An Empirical Investigation”, The Journal of Systems and Software, 80 (9), 1438–1449.
Ali-Babar M., Niazi M. (2008): “De-motivators for Software Process Improvement: An Empirical Investigation”, Software Process Improvement and Practice Journal 13(3), 249–264 (Perspectives on Global Software Development: Special Issue on PROFES 2007).
Ang S. and Straub D. W. (2013): “Production and Transaction Economies and IS Outsourcing: A Study of the U.S. Banking Industry,” MIS Quarterly (22:4), pp. 535-552.
Bradstreet D. And Bradstreets D. (2007): “Barometer of Global Outsourcing”, Dun & Bradstreet.
Brown S.W. and Swartz T.A. (1989): “A Gap Analysis of Professional Software Service Quality”, Journal of Marketing, (53:2), 92-98.
Burke K. (2010): “The Impact of Internet and ICT Use among SMË Agribusiness Growers and Producers”, Journal of Small Business and Entrepreneurship, 23(2), 173-194.
Busi M, and McIvor R. (2014): ‘‘Setting the outsourcing research agenda: the top-10 most urgent outsourcing areas’’, Strategic Outsourcing: An International J., 1(3): 185-197.
Carmel E. (2003): “Taxonomy of New Software Exporting Nations”, The Electronic Journal on Information Systems in Developing Countries, 13.
Carmel E. and Agarwal R. (2002): “The Maturation of Offshore Outsourcing of Information Technology Work”, MIS Quarterly Executive, 1(2), 65-77.
Chang Y. B. and Gurbaxani V. (2012): “Information Technology Outsourcing, Knowledge Transfer, and Firm Productivity: An Empirical Analysis”, MIS Quarterly (36:4), pp. 1043-1063.
Chua A. L. And Pan S. L. (2008): “Knowledge transfer and organizational learning in IS offshore Outsourcing”, Omega, 36(2008), 267–281.
Gurbaxani V. (2007): “IT Outsourcing Contracts: Theory and Evidence“, in Managing in the Information Economy, U Apte and U. Karmarkar (eds.), New York: Kluwer Academic Publishing.
James K. L. (2009): Software Engineering, PHI Learning Private Limited, New Delhi-110001.
Kern T. and Willcocks L. (2000): “Exploring Information Technology Outsourcing Relationships: Theory and Practice”, Journal of Strategic Information Systems. 9. 321-350.
Khan S., Niazi M. And Ahmad R. (2009): “Critical Success Factors for Offshore Software Development Outsourcing Vendors: A Systematic Literature Review.
Khan S. U., Niazi M. and Ahmad R. (2011): "Factors Influencing Clients in the Selection of Offshore Software Outsourcing Vendors: An exploratory Study Using a Systematic Literature Review", Journal of Systems and Software, vol. 84, no. 4, pp. 686-699.
Khirallah D. (2012): "Out With 'Outsourcing' And In With 'Co-Sourcing'", Information Week Magazine. Retrieved May 23, 2012.
Khong K. W. (2005): “The Perceived Impact of Successful Outsourcing on Customer Service Management”, International Journal on Supply Chain Management, 10(5): 402-411.
Kramer R. And Tyler T. (1996): “Trust in Organizations: Frontiers of Theory and Research”, Thousand Oaks, CA, US: Sage Publication Inc.
Krishna S., Sahay S. and Walsham G. (2004): “Managing Cross-cultural Issues in Global Software Outsourcing”, Communications of the ACM. 47(4). 62–66.
Lander M. C., Purvis R. L., McCray G. E. and Leigh W. (2004): “Trust-building Mechanisms Utilized in Outsourced IS Development Projects: A Case Study, Information and Management, 41(4). 509-528.
Limi A. (2008): “Effects of Improving Infrastructure Quality on Business Costs: Evidence from Firm-Level Data”, Policy Research Working Paper 4581, World Bank, Washington DC.
Minevich M. and Richter F. J. (2008): “Global Outsourcing Repor”, Retrieved from http://globalequations.com/Global%20Outsourcing%20Reportpdf.
Nahar N., Käkölä, T. and Huda N. (2002): “Software Production in Developing and Emerging Countries through International Outsourcing”, Proceedings of the Information and Communication Technologies and Development, New Opportunities, Perspectives & Challenges, 7th International Working Conference of IFIP WG 9.4, S. Krishna & S. Madon(Eds), Indian Institute of Management Bangalore: Bangalore, Pages 292-310.
Nworuh, G. E. (2012). Basic Research Methodology for Trainees and Trainers in Management Sciences (2nd Ed.), Grossmill press Owerri, Nigeria.
Oza N. V. (2006): "An empirical evaluation of client- vendor relationships in Indian software outsourcing companies", A PhD Thesis, School of Computer Science, University of Hertfordshire, UK.
Papaioannou S. K. (2004): FDI and ICT Innovation and Effect on Productivity Growth: A Comparison between Developing and Developed Countries, Athens University of Economics and business, Athens, Greece.
Piatkowski M. (2003): The Contribution of ICT Investment to Economic Growth and Labor Productivity in Poland, retrieved from: http://www.wipo.int/sme/en/documents/wipo.magazine/11 2003pdf
Sabherwal R. (1999): “The role of Trust in Outsourced IS Development Projects”, Communications of the ACM. 42(2). 80-86.
Sahay S., Nicholson B. and Krishna S. (2003): “Global IT Outsourcing: Software Development Across Borders [Electronic version], Cambridge University Press.
Williams W. S. (2006): “Supporting the Growth of Small and Medium Enterprises”, WIPO Magazine, Nov–Dec., 2003, pp. 14, retrieved from: http://www.wipo.int/sme/en/documents/wipo_magazine/11_2003pdf.