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Contracts in Offshore Software Development: An Empirical Analysis

Author

Listed:
  • Anandasivam Gopal

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

  • Konduru Sivaramakrishnan

    (Bauer College of Business, University of Houston, Houston, Texas 77204)

  • M. S. Krishnan

    (University of Michigan Business School, University of Michigan, Ann Arbor, Michigan 48109)

  • Tridas Mukhopadhyay

    (Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

We study the determinants of contract choice in offshore software development projects and examine how the choice of contract and other factors in the project affect project profits accruing to the software vendor. Using data collected on 93 offshore projects from a leading Indian software vendor, we provide evidence that specific vendor-, client-, and project-related characteristics such as requirement uncertainty, project team size, and resource shortage significantly explain contract choice in these projects. Our analysis suggests that contract choice significantly determines project profit. Additionally, some ex ante vendor-, client-, and project-related characteristics known at the time of choosing the contract continue to significantly influence project profits after controlling for contract choice. We also provide evidence to show that project duration and team size affect project profits.

Suggested Citation

  • Anandasivam Gopal & Konduru Sivaramakrishnan & M. S. Krishnan & Tridas Mukhopadhyay, 2003. "Contracts in Offshore Software Development: An Empirical Analysis," Management Science, INFORMS, vol. 49(12), pages 1671-1683, December.
    • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:12:p:1671-1683
    DOI: 10.1287/mnsc.49.12.1671.25120
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    References listed on IDEAS

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