Global Software Development: Where are the Benefits?

Abstract:

Global Software Development (GSD) is increasingly becoming the normal practice in the software industry, readily evidenced by U.S. estimates that the value of the offshore software development market has increased 25-fold over the past 10 years, to the extent that one-quarter of U.S. spending on application development, integration and management services is expected to go off-shore according to recent predictions. There are many potential benefits that can arise from GSD. The most frequently cited one is that of reduced development costs due to the salary savings possible. Also, GSD can lead to reduced development duration due to greater time zone effectiveness as companies practice the so-called ‘follow-the-sun’ software development model. GSD also affords new opportunities for cross-site modularization of development work, potential access to a larger and better-skilled developer pool, and the possibility of greater innovation, learning and transfer of best practices.5 Finally, GSD can facilitate closer proximity to markets and customers.

However, GSD also introduces a number of challenges in relation to communication, coordination and control of the development process. These arise due to the distances involved in three dimensions – geographical, temporal, and socio-cultural (See Figure 1). As a consequence, much research and practice has focused on trying to find ways to overcome the GSD challenges identified in Figure 1. In the literature to date, the potential benefits of GSD are usually just mentioned very briefly, if they are mentioned at all, and the realization of these benefits seems to be more or less taken for granted. The primary focus instead is on how the problems inherent in GSD might be addressed. Here, we reverse this trend and focus instead on the benefits and the extent to which they are actually being realized in practice in three global companies practicing GSD.

Opportunities and Challenges in GSD:

Different Approaches to Team Structure in GSD:

Extent of Realization of GSD Benefits:

Conclusions:

Table 1 summarizes the main insights gained from this study in terms of how the assumed benefits of GSD played out in the studied organizations. While there are many significant beneficial aspects of GSD, our study clearly shows that these benefits are neither clear-cut nor can their realization be taken-for-granted as the GSD literature may lead one to believe. Specifically, anyone engaging in GSD should be aware of the many risks associated with these “benefits”. Do not assume that overall costs will be reduced, as lower wages are countered by the overhead of higher managerial complexities. Pure follow-the-sun software development seems unrealistic, and companies may prefer to modularize work instead of taking advantage of developers situated in various timezones. Seeking out employees in rapid growth markets can backfire, with very high attrition rates reported. Sharing of best practice between cultures can be problematic, especially if those expected to share feel they are giving away their competitive edge to lowerwaged colleagues, or do not trust their abilities. Taking advantage of closer proximity to foreign markets leads to a number of socio-cultural problems which have to be addressed.