Project Management Issues in IT Offshore Outsourcing

Global partnerships are forming to take advantage of the cost savings associated with offshoring as well as other strategic benefits. Not all information technology offshoring projects, however, are successful. Cost overruns, increased complexity and defective code cause organizations to rethink their offshoring strategy and their methods for managing these projects. In this paper, project management issues associated with offshore information technology outsourcing projects are identified and specific recommendations for addressing these issues are presented. INTRODUCTION Globalization, increased competition, shorter cycle times and an uncertain economic climate are the primary motivators for firms to reexamine traditional methods of delivering information technology (IT) based services and systems. Offshore IT outsourcing is an increasingly popular option for many firms as they transfer a wide array of software development and customer service applications to countries overseas (Misra, 2004). The rate of growth in the global IT outsourcing market is projected to grow at a compound annual rate of 26%, increasing from $10 billion in 2003 to an estimated $31 billion in 2008. During the same period, savings in offshore projects are