Beyond the Black-Box : Knowledge Overlaps in Software Outsourcing

The black-box model of software development outsourcing is prevalent and usually works well. The assumption embedded in this approach is that the vendor can successfully solve a client organization's business problem without either organization having to deeply understand each others' domains. This article reports on a field study of 209 global projects where we explored the limits of the black-box and potential solutions to those limits. The key finding of the study is the black-box approach usually works well in routine projects but fails in projects involving novelty. In the latter types of projects, careful deviations from the black-box model are necessary depending on the type of novelty in the project. In conceptually novel projects, it is more important for the vendor to deeply understand the client's business. Projects involving novel development processes require that the client possess deeper technical expertise that is ordinarily assumed in the black-box approach. A congruence framework for assessing client-vendor fit in practice is also developed based on the findings. Some insights into the effectiveness of capability maturity, intense architecture design effort, and development coordination tools are also presented