Analyzing Factors That Influence Offshore Outsourcing Decision of Application Maintenance

Abstract

Application maintenance consumes a considerable amount of an organization’s time and resources each year. Almost 60% of IT budget is spent alone on application maintenance. The reason of offshore outsourcing of application maintenance is not only the reduction of maintenance cost but to free up the resources and to keep the focus on core products. Offshore outsourcing is a common business strategy that is used by companies to achieve cost savings about 20-50%. However, the decision making process of application maintenance is a complex phenomenon. It is based on a set of influencing factors, clients’ requirements and nature of the project. Hence, the current study is aimed at the in-depth investigation of the complex sourcing decision process of application maintenance. Accordingly, a systematic literature review is performed to determine the influencing factors and critical success factors that will be used by the decision makers for the evaluation of projects before making the outsourcing decisions. A total of 15 influencing factors out of 52 selected papers were identified. Based on the defined criteria, amongst the identified factors, only 10 factors were ranked as critical success factors, which are employees’ skills, cost, legal requirements, infrastructure, communication, knowledge transfer, maturity level, project management, language barrier and frequent requirements changes. Consequently, a sourcing model was proposed based on the identified critical success factors that help the IT managers and domain experts in making appropriate outsourcing decisions.