Software Complexity and Organization of Firms’ Offshoring Activities

  • Arto Ojala
  • Eriikka Paavilainen-Mäntymäki
  • Ning Su
  • Kalle Lyytinen
Conference paper
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 294)


How does software complexity shape software providers’ offshoring tasks, and how do such firms organize their offshoring activity? These questions are important, since the global software development market is growing rapidly, offering new opportunities for software managers and entrepreneurs to distribute their activities geographically. Based on a multi-site case study of 12 software firms, we study connections between software complexity and the offshoring strategies selected. Our findings suggest that software firms select a variety of organizational structures for their offshoring activity, and that the selection is shaped by the complexity of the software in question.


Software complexity Offshoring Outsourcing Software firms 


  1. 1.
    Gartner: Gartner Says Worldwide Software Market Grew 4.8 Percent in 2013. Press release (2014).
  2. 2.
    Peltonen, J., Rönkkö, M., Mutanen, O.-P.: Growth Forum 2013 Summary Report. Ohjelmistoyrittäjätry, Helsinki (2014).
  3. 3.
    Su, N.: Internationalization strategies of Chinese IT service suppliers. MIS Q. 37(1), 175–200 (2013)CrossRefGoogle Scholar
  4. 4.
    Su, N.: Cultural sensemaking in offshore information technology service suppliers. MIS Q. 39(4), 959–983 (2015)CrossRefGoogle Scholar
  5. 5.
    Metters, R.: A typology of offshoring and outsourcing in electronically transmitted services. J. Oper. Manag. 26(2), 198–211 (2008)CrossRefGoogle Scholar
  6. 6.
    Ojala, A., Tyrväinen, P.: Business models and market entry mode choice of small software firms. J. Int. Entrepreneurship 4(2–3), 69–81 (2006)Google Scholar
  7. 7.
    Jarke, M., Loucopoulos, P., Lyytinen, K., Mylopoulos, J., Robinson, W.: The brave new world of design requirements. Inf. Syst. 36(7), 992–1008 (2011)CrossRefGoogle Scholar
  8. 8.
    Jarke, M., Lyytinen, K.: Complexity of systems evolution: requirements engineering perspective. ACM Trans. Manag. Inf. Syst. 5(3), 11:1–11:7 (2015)CrossRefGoogle Scholar
  9. 9.
    Sambamurthy, V., Zmud, R.W.: The organizing logic for an enterprise’s IT activities in the digital era—a prognosis of practice and a call for research. Inf. Syst. Res. 11(2), 105–114 (2000)CrossRefGoogle Scholar
  10. 10.
    Pressman, R.S.: Software Engineering: A Practitioner’s Approach. McGraw-Hill Higher Education, New York (2004)zbMATHGoogle Scholar
  11. 11.
    Wareham, J., Fox, P.B., Cano Giner, J.L.: Technology ecosystem governance. Organ. Sci. 25(4), 1195–1215 (2014)CrossRefGoogle Scholar
  12. 12.
    Hanseth, O., Lyytinen, K.: Design theory for dynamic complexity in information infrastructures: the case of building internet. J. Inf. Technol. 25(1), 1–19 (2010)CrossRefGoogle Scholar
  13. 13.
    Alajoutsijärvi, K., Mannermaa, K., Tikkanen, H.: Customer relationships and the small software firm: a framework for understanding challenges faced in marketing. Inf. Manag. 37(3), 153–159 (2000)CrossRefGoogle Scholar
  14. 14.
    Nambisan, S.: Why service business are not product businesses. MIT Sloan Manag. Rev. 42(4), 72–80 (2001)MathSciNetGoogle Scholar
  15. 15.
    Segelod, E., Jordan, G.: The use and importance of external sources of knowledge in the software development process. R&D Manag. 34(3), 239–252 (2004)CrossRefGoogle Scholar
  16. 16.
    Hoch, D.J., Roeding, C.R., Purkert, G., Lindner, S.K., Müller, R.: Secrets of Software Success. Harvard Business School Press, Boston (2000)Google Scholar
  17. 17.
    Levin, A.Y., Massini, S., Peeters, C.: Why are companies offshoring innovation? The emerging global race for talent. J. Int. Bus. Stud. 40(6), 901–925 (2009)CrossRefGoogle Scholar
  18. 18.
    Manning, S., Massini, S., Lewin, Y.A.: A dynamic perspective on next-generation offshoring: the global sourcing of science and engineering talent. Acad. Manag. Perspect. 22(3), 35–54 (2008)CrossRefGoogle Scholar
  19. 19.
    Aspray, W., Mayadas, F. & Vardi, M.Y.: Globalization and offshoring of software. Report of the ACM Job Migration Task Force, Association for Computing Machinery (2006)Google Scholar
  20. 20.
    Davis, G., Ein-Dor, P., King, W., Torkzadeh, R.: IT offshoring: history, prospects and challenges. J. Assoc. Inf. Syst. 7(11), 770–795 (2006)Google Scholar
  21. 21.
    Jarvenpaa, S.L., Mao, J.-Y.: Operational capabilities development in mediated offshore software services models. J. Inf. Technol. 23(1), 3–17 (2008)CrossRefGoogle Scholar
  22. 22.
    Prikladnicki, R., Audy, J.L.N.: Comparing offshore outsourcing and the internal offshoring of software development: a qualitative study. In: AMCIS 2009 Proceedings (2009)Google Scholar
  23. 23.
    Mens, T.: On the complexity of software systems. Computer 45(8), 79–81 (2012)CrossRefGoogle Scholar
  24. 24.
    Anderson, P.: Perspective: complexity theory and organization science. Organ. Sci. 10(3), 216–232 (1999)CrossRefGoogle Scholar
  25. 25.
    Carmel, E., Tjia, P.: Offshoring Information Technology: Sourcing and Outsourcing to a Global Workforce. Cambridge University Press, Cambridge (2005)CrossRefGoogle Scholar
  26. 26.
    Williams, C.: Client–vendor knowledge transfer in IS offshore outsourcing: insights from a survey of Indian software engineers. Inf. Syst. J. 21(4), 335–356 (2011)CrossRefGoogle Scholar
  27. 27.
    Luo, Y.: Dynamic capabilities in international expansion. J. World Bus. 35(4), 355–378 (2000)CrossRefGoogle Scholar
  28. 28.
    Lu, J.W., Beamish, P.W.: The internationalization and performance of SMEs. Strateg. Manag. J. 22(6–7), 565–586 (2001)CrossRefGoogle Scholar
  29. 29.
    Oshri, I., Kotlarsky, J., Willcocks, L.P.: The Handbook of Global Outsourcing and Offshoring, 3rd edn. Palgrave Macmillan, London (2015)CrossRefGoogle Scholar
  30. 30.
    Carmel, E., Nicholson, B.: Small firms and offshore software outsourcing: high transaction costs and their mitigation. J. Glob. Inf. Manag. 13(3), 33–54 (2005)CrossRefGoogle Scholar
  31. 31.
    Lacity, M.C., Khan, S., Yan, A., Willcocks, L.P.: A review of the IT outsourcing empirical literature and future research directions. J. Inf. Technol. 25(4), 395–433 (2010)CrossRefGoogle Scholar
  32. 32.
    Lacity, M.C., Solomon, S., Yan, A., Willcocks, L.P.: Business process outsourcing studies: a critical review and research directions. J. Inf. Technol. 26(4), 221–258 (2011)CrossRefGoogle Scholar
  33. 33.
    Su, N., Levina, N., Ross, J.W.: The long-tail strategy of IT outsourcing. MIT Sloan Manag. Rev. 57(2), 81–89 (2016)Google Scholar
  34. 34.
    Khan, S.U., Niazi, M., Rashid, A.: Barriers in the selection of offshore software development outsourcing vendors: an exploratory study using a systematic literature review. Inf. Softw. Technol. 53(7), 693–706 (2011)CrossRefGoogle Scholar
  35. 35.
    Banker, R.D., Davis, G.B., Slaughter, S.A.: Software development practices, software complexity, and software maintenance performance: a field study. Manag. Sci. 44(4), 433–450 (1998)CrossRefzbMATHGoogle Scholar
  36. 36.
    Tauterat, T., Mautsch, L.O., Herzwurmm, G.: Strategic success factors in customization of business software. Lect. Notes Bus. Inf. Process. 114, 267–272 (2012)CrossRefGoogle Scholar
  37. 37.
    Kabbedijk, J., Brinkkemper, S., Jansen, S., van der Veldt, B.: Customer involvement in requirements management: lessons from mass market software development. In: 17th IEEE International Requirements Engineering Conference, pp. 281–286 (2009)Google Scholar
  38. 38.
    Yin, R.K.: Case Study Research: Design and Methods. Sage, Beverly Hills, CA (2009)Google Scholar
  39. 39.
    Benbasat, I., Goldstein, K.K., Mead, M.: The case research strategy in studies of information systems. MIS Q. 11(3), 369–386 (1987)CrossRefGoogle Scholar
  40. 40.
    Edmondson, A.C., McManus, S.E.: Methodological fit in management field research. Acad. Manag. Rev. 32(4), 1155–1179 (2007)CrossRefGoogle Scholar
  41. 41.
    Eisenhardt, K.M.: Building theories from case study research. Acad. Manag. Rev. 14(4), 532–550 (1989)Google Scholar
  42. 42.
    Eisenhardt, K.M., Graebner, M.E.: Theory building from cases: opportunities and challenges. Acad. Manag. J. 50(1), 25–32 (2007)CrossRefGoogle Scholar
  43. 43.
    Huber, G.P., Power, D.J.: Retrospective reports of strategic-level managers: guidelines for increasing their accuracy. Strateg. Manag. J. 6, 171–180 (1985)CrossRefGoogle Scholar
  44. 44.
    Myers, M.D., Newman, M.: The qualitative interview in IS research: examining the craft. Inf. Organ. 17(1), 2–26 (2007)CrossRefGoogle Scholar
  45. 45.
    Miller, C.C., Cardinal, L.B., Glick, W.H.: Retrospective reports in organizational research: a reexamination of recent evidence. Acad. Manag. J. 40(1), 189–204 (1997)CrossRefGoogle Scholar
  46. 46.
    Miles, M.B., Huberman, A.M.: Qualitative Data Analysis: An Expanded Sourcebook. Sage, Beverly Hills (1994)Google Scholar
  47. 47.
    Pettigrew, A.M.: Longitudinal field research on change: theory and practice. Organ. Sci. 1(3), 267–292 (1990)CrossRefGoogle Scholar
  48. 48.
    Ojala, A., Tyrväinen, P.: Market entry and priority of small and medium-sized enterprises in the software industry: an empirical analysis of cultural distance, geographical distance, and market size. J. Int. Mark. 15(3), 123–149 (2007)CrossRefGoogle Scholar

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Arto Ojala
    • 1
  • Eriikka Paavilainen-Mäntymäki
    • 2
  • Ning Su
    • 3
  • Kalle Lyytinen
    • 4
  1. 1.University of JyväskyläJyväskyläFinland
  2. 2.University of TurkuTurkuFinland
  3. 3.Ivey Business SchoolLondonCanada
  4. 4.Case Western Reserve UniversityClevelandUSA

Personalised recommendations