System dynamics modeling applied to software outsourcing decision support

Requirements in the software market for reduced costs, reduced development cycle time, as well as shortages of software developers, have motivated software organizations to outsource product development processes or components. The primary objective of this research is to determine whether software organizations can improve their software outsourcing strategies and processes in response to these forces. This research utilizes simulation modeling to explore the dynamics of outsourcing relationships, including both positive and negative outcomes, as well as to provide potential decision support for strategic outsourcing decisions. The model's current implementation, applicability and usefulness are demonstrated with an example use case and analysis of simulation results. We also present suggestions for future research directions on software outsourcing strategies and processes. Copyright © 2000 John Wiley & Sons Ltd