Ever wondered what it takes to run an outsourcing project successfully? Ever considered the risks involved in not only hiring IT outsourcing companies, but also taking up clients from far and wide? It is business’ nature that risks can’t be avoided and that there are going to be successes and failures. What if we could predict which projects, clients and vendors have the highest probabilities of being failures? What if we knew beforehand if we could stop projects from failing and if we could ensure their success?
It looks like neither the vendors nor their clients are completely powerless against the mechanisms of business risks. There are ways to know what works and what will not. In this article, we need to take a brief look at Magne Jørgensen’s study on the various failure factors of small software projects in the IT outsourcing industry. The study validates several doubts and hunches that we already had.1
What are the highlights of the study?
The study’s aim, methodology and findings
The study titled “Failure factors of small software projects at a global outsourcing marketplace” was published in the Journal of Systems and Software early this year. The study helps us to understand why small scale software projects fail in an outsourcing marketplace setting. The study evaluated 7,85,325 projects and tasks at a marketplace called vWorker.com. Using a binary logistic regression model, Jørgensen was able to predict 74% of failures and 67% of non-failures, a feat that is almost astounding. There are several important points that we need to understand.
What we think
The study used a large sample and reliable statistical methods. Thus, its results can be considered valid. If you are looking for good quality vendors, you probably need not reduce the price so much that it de-motivates them. On the other hand, vendors must not take up projects which are too large for them to handle. Both the clients and the vendors need to bite as much as they can chew. Also, depending on the testimonies of friends and acquaintances to choose the right vendor is a good idea, if we consider the findings of this study.
An abstract to the study can be found here.