Analysis Of Risk Management Issues Of Software Outsourcing Companies

Outsourcing, as a business model that can help corporate to reduce operating cost, improve their agility and focus on their core competency, has been developing for more than several dozen years. During the years, the size of outsourcing market and related research and study has also been evolving. Growing together with the domestic economical environment and software industry, Outsourcing in software industry has gone through a rapid development. More and more Chinese software companies will explore the idea to outsourcing part of their internal processes to a 3^rd party vendor. Accompanied with this trend is the accumulation of both strategic and execution level risks. How to help China software companies identify and avoid these risks is the key purpose of this paper.This paper is composed through the study of existing articles and theories, data gathering and analysis and experience from author's job. By analyzing the international and domestic software outsourcing market, the paper identified the enormous opportunity that exists for China to further develop its international and domestic software outsourcing market. The paper also described how to identify and manage the risks that faces the outsourcing processes from both theoretical and practical perspective.This paper is divided into 4 parts. Part 1 includes introduction of outsourcing concept, the background of paper, the incentive for a company to carry out outsourcing and existing outsourcing theory and also the method used by this paper. Part 2 include the analysis of the development trend international and domestic outsourcing, the benefit of developing software outsourcing in China, the root cause analysis of outsourcing failure and implied challenges to manage outsourcing risks at different level. Part 3 introduces multiple theories that can be applied software companies to help regulates its operation, identify and avoid the risks. Part 4 introduces how to apply the theories in a real company by using case study and working experience gathered by author.