The Decision-Making And Management Research On Software Outsourcing

With the increasing cost pressure that big software companies face and urgent need for optimal allocation of resources, software outsourcing has gradually become a very important business model and also a development strategy in modern society and is adopted by more and more software companies. However, these software outsourcing projects bring both economic growth and new problems, and not all the enterprises have got their expected achievement. On one hand, not all of the outsourcers have seriously considered these points as what should be outsourced, who can be the suppliers and how to outsource. As a result, this leads to the mistakes in their operating process. On the other hand, concerned of maximum profit, it is difficult to achieve an actual profit balance between outsourcers and suppliers. As a company under control, supplier is always afraid he will get fewer profit from the total profit allocation, so he won't be 100 percent willing to make a commitment to the cooperation, sometimes even acts opportunistically. So actually, outsourcers are always bothered by various troubles and risks from outsourcing itself and suppliers, and have to face huge challenges on their way of development.This paper right starts with the outsourcing decision-making and management issues which outsourcers have to deal with, and focuses on analyzing and discussing the decision-making process, supplier selection method and relationship issues between the two sides of software outsourcing. The main content of the paper involves three parts.First, although outsourcers will benefit from software outsourcing, they have to face various risks in such outsourcing kind relationship at the same time. Thus, better understanding the risks of outsourcing and choosing a proper strategy is one key determinant of a successful outsourcing. In Chapter 2, several software outsourcing strategies are introduced first, then the attributes to possible outsourcing risks are analyzed, and a conceptual framework for strategy selection of software outsourcing is proposed based on those risk attributes. Finally, this framework is applied together with the risk assessment of software outsourcing and proved to be operative. Second, the supplier selection modes and methods for software outsourcing are discussed in Chapter 3-6. Two supplier selection modes direct negotiation and public bidding are introduced. Then a three-stage decision-making model comprised of a qualitative evaluation method AHP, a quantitative evaluation method DEA and (0-1) Integer Programming has been created to select an optimal group of suppliers for the software outsourcing project. And this will provide some reference for the outsourcer in the decision making process.Third, Chapter 7 adds a sub-game stage, contract termination, to the Principle-Agent model, then sets up a four-stage dynamic game model which is suitable for the software outsourcing. The decision-making conditions for outsourcer and supplier involved are analyzed respectively under each stage. And in Chapter 8, on the premise of win-win principle, some implementation management strategies for supervision and control, incentive and cooperation are proposed, and also mechanism is put forward for conflict management.