Critical challenges in managing offshore software development outsourcing contract from vendors' perspectives

Offshore software development outsourcing (OSDO) is a Global Software Engineering paradigm for developing high quality software at low cost in low‐wage countries; where client organisation contracts out all or part of software development activities to vendor organisation. The vendor organisation provides the agreed software development work in return for remuneration. The objective of the research is to identify critical challenges faced by vendor organisations in management and execution of OSDO contract, and to analyse the identified challenges based on the variables such as time/year and organisational size. The authors have used systematic literature review for the identification of the challenges in OSDO contract. They have identified that 15 challenges faced by vendors in OSDO contract. Amongst these, nine challenges were marked as critical challenges. They have further analysed the identified challenges based on different variables such as organisational size, time and correlation analysis.Vendor organisations should concentrate on addressing the identified critical challenges such as ‘lack of project management’, ‘poor monitoring system’, ‘lack of outsourcing relationship management’, ‘cultural and linguistic issues’, ‘non‐competitive price’, ‘intellectual property rights (IPR) and regulatory issues’, ‘failure to manage end‐user expectation’, ‘lack of negotiation strategies’ and ‘unforeseen contingencies’ for successful outcome of OSDO contract.