Exploring the Contribution of Problems in Team-Level Functionality to the Failure of Offshore-Outsourced Software Projects

Offshore outsourcing has been growing steadily since the 1990s, and this trend of sourcing services from low-cost countries such as India and China will continue in the near future. Despite the inherent challenges of offshore-outsourced software development (OOSD) projects, organizations in high-cost countries engage in OOSD projects because of compelling cost differences. We investigated the team-level functioning of projects, isolating the unique characteristics that lead to failures in offshore-outsourced software development (OOSD) projects. Using the grounded theory methodology, we analyzed OOSD teams, composed of client onshore, vendor onshore and vendor offshore sub-teams. 19 project managers were interviewed from both client and vendor sides based in Switzerland and India; these project managers provided details on one failed project each. Based on the extant team literature, we discuss seven team aspects that emerged from project cases leading to failure. We develop theoretical propositions relevant for OOSD projects that argue for the integration of multiple sub-teams involved in offshore projects. Further, we develop an exploratory model of OOSD team failure and identify four higher-level categories that influence team performance: team initiation, team interactions, team evaluation and team moderators.