By Mark Looi and Marc Szepan (University of Oxford).
Summary
Companies use two popular strategies to develop software: outsourcing to offshore locations and Agile development. These strategies are often used together and assumed to deliver similar results to that of software development teams working in the same company at a single location. But our research finds that these are poor assumptions and managers must make significant accommodations to achieve optimal results.
Nearshore development is preferred for overall success, quality, reduced management effort, maintaining schedule, higher quality, and fewer communication problems. On the other hand, Agile development methodologies for outsourced offshore projects appear to cost more. In fact, managers should favor nearshore for communication-intensive projects, and primarily consider structured (i.e., non-Agile) development for projects that are either developed far-offshore or whose requirements are well-understood. Regardless, managers should modify Agile for far-offshore software development and look to shorten supply chains.
This article is adapted from research conducted by Looi and Szepan in 2018. (Looi 2021)