Chapter 231 Chapter Twenty-Three Location Economics and Global Software Development Centers

Chapter 232 Outsourcing Software Development: The Location Decision GSD Decision Location Decision IT Manager Size of Company Availability of Software Engineers and their Wages Home Country Factors Trained and skilled SW engineers Level of IT labor cost Risk Infrastructure Exchange Rate Host Country Factors Educational Institutions Training Facilities S/W Piracy Rate Political Stability

Chapter 233 Managerial Skills  Distributed development techniques  Host country culture  Knowledge transfer and communication

Chapter 234 Size of Company  Big!

Chapter 235 Supply of Skilled IT Professionals and Wage Demands  In HOME Country (i.e., HQ)  General shortfall (paradoxical)  Wages rose 50% between 1990 and 1998; it is still high

Chapter 236 Supply of Trained and Skilled SW Engineers  Depends on institutions such as universities and technical schools  India, Russia, Brazil have large supply of such individuals; the Indians speak English  Israel, Ireland have many highly-specialized SW engineers (defense, financial applications)

Chapter 237 Wages in Host Country  Lower in developing countries, by 50 to 90%  “Another factor indicative of the health of the IT labor market is a strong domestic IT market and penetration of technology” (pg. 453)

Chapter 238 Risk  Piracy  Political Stability  Regulations, Tariffs

Chapter 239 Infrastructure  Telecommunications  Electricity  Repair of Equipment/Supply of Equipment  “Information Infrastructure”

Chapter 2310 Financial Considerations  Exchange Rate and volatility  Convertability of currency  Banking, funds transfer  Accounting, accountability  Taxation Schemes

Chapter 2311 Additional Factors GSD Decision Location Decision IT Manager Size of Company Availability of Software Engineers and their Wages Home Country Factors Trained and skilled SW engineers Level of IT labor cost Risk Infrastructure Exchange Rate Host Country Factors Educational Institutions Training Facilities S/W Piracy Rate Political Stability MACRO LEVEL (Country) MICRO LEVEL (Project)

Chapter 2312 Macro-Level Considerations  Language  Quality (Bang for buck/Quality vs. Cost)  Certification  ISO 9000  SEI Level 2, 3, 4, or 5  CMM or SPICE or other

Chapter 2313 Micro-Level Considerations  About the project or application  McFarlan Risk Factors  Size  Stability/Specificity/Structure  “Gap”  Time Structure (sequential, parallel, overlapped)

Chapter 2314 But You Already Know This Ho

Chapter 2315 Outsourcing Software Development: The Location Decision GSD Decision Location Decision IT Manager Size of Company Availability of Software Engineers and their Wages Home Country Factors Trained and skilled SW engineers Level of IT labor cost Risk Infrastructure Exchange Rate Host Country Factors Educational Institutions Training Facilities S/W Piracy Rate Political Stability Brazil Indonesia South Korea Egypt Russia China India