Conclusion

Our findings have multiple implications for the management of outsourced offshore software projects. First, the study suggests that managing the offshore projects entail a life cycle effect where different capabilities are more important for different situations. For offshore managers, we find that team stability is an important component affecting project performance, project management, communication effectiveness and customer satisfaction. In general, managers must work hard to maintain the stability of the project teams. However, the overall duration of the offshore project moderates some of the influence of team stability. For new projects, team stability influences project performance, but does not directly influence customer satisfaction. In contrast, for older projects, team stability directly impacts customer satisfaction. Intuitively, when projects are new the customer is focused mainly on project delivery. However, as the team gains experience and project management capabilities over time, customers are loathe to lose valuable team members, and turnover directly affects customer satisfaction. While offshore managers must strive to maintain stable teams throughout, such stability is of even greater importance in established projects.

This finding also has implications for a practice that several software services firms’ use called ‘shadowing.’ Shadow engineers work with project groups to learn the work, and prepare themselves to be inducted into the project. While the practice of shadowing can help

engineer who is anticipated to move out of the project and can help cut training lead times, it involves a short-term duplication of resources within the project team. In practice, shadow engineers are employed in new projects – often at project inception – as well as in long duration projects. Our results suggest that managers may best employ ‘shadow engineers’ not in the newer projects, but in projects that have been established (Greater than 2 years). This gestation period allows for knowledge structures within the project to be stabilized, and this knowledge can then be more readily transferred to the shadow engineers.

Project management capabilities play an important role. They improve project performance and also impact customer satisfaction. Project management capabilities also mediate the impact of communication effectiveness on project performance. For managers of offshore software firms, this implies that a sole focus on hard technical capabilities related to software design and programming is insufficient; adequate attention must be paid to developing capabilities that enable effective planning and management of resources across time, and also managing communications with customers. The achievement of benchmark assessment ratings that are designed to build project management capabilities, including the well-known Capability Maturity Model from the Software Engineering Institute (SEI-CMM), can help in this context. The role of project management capabilities is more important when project-related uncertainty is high. Accordingly, managers must seek to build such capabilities particularly for M&D projects. Our results suggest that such capabilities are particularly effective in driving customer satisfaction in the uncertain environment associated with M&D projects (as opposed to testing projects).

Communication effectiveness positively affects perceptions of project performance and project management. While communication effectiveness does not directly affect

customer satisfaction in most cases, its indirect effect through project performance and project management is significant. Our results suggest that managers must pay attention to multiple components of communication – including communication intensity and quality – towards delivering a satisfactory customer experience. Our interviews of managers at offshore software service providers suggested that some of these providers managed communications with customers better than others. In firms that performed strongly on this dimension, the offshore managers usually drew up a formal communication plan for new projects and these plans were reviewed periodically to reflect the needs of the prevailing project situation. These plans specified the reports that were to be exchanged, the lines of communication that were to be maintained, communication formats (email/oral communication), issue escalation hierarchies, the preferred initiators of communication for various tasks, preferred times for conference calls, and also the communication plan review periods.

We find evidence of non-linear, inverted-U shaped effects of team size on communication effectiveness. This suggests that effective communication with customers can be an issue in both very small and very large projects – though for different reasons, as explained earlier. Correspondingly, managers must play special attention to implementing procedures that support the communication process in such projects.

While we have discussed some of the key managerial implications of our findings from the perspective of the offshore managers, much of the discussion applies, with due adjustments, to customers in selecting outsourcing partners and managing outsourcing projects. For example, our findings suggest for tasks characterized by high uncertainty, the customer must try and choose a service provider with strong project management

capabilities. Likewise, the customer must set expectations of performance depending on the contextual variables associated with the project. For example, since learning takes time, we find that team stability is less crucial in the early stages of a project but is more important for projects that have been in the works for a while. Instead of being concerned about the lack of team stability during the very early stages of a new project, the customer may benefit from focusing on other commitments related to delivery specifications, quality, and timeliness.

CHAPTER 3

3. Individual Learning and Productivity in a Software Maintenance Environment: An