The Impact of Software Development Outsourcing on the Growth of the IT Sector in Developing Countries
This paper investigates the impact of Software Development Outsourcing on the growth of the IT sector in developing countries, especially Nigeria. It identifies major software outsourcing drivers and studies the relationship between them and the growth of the IT industry. The study became necessary owing to the obvious decline in IT implementation in most developing countries despite exponential growth of the sector in some developed countries of the world where outsourcing is practiced, and the attendant economic boast in those nations. From a review of existing literature focusing on selected small and medium scale enterprises and IT firms in Nigeria, five driving factors behind the adoption of software outsourcing were identified which include: cost saving/reduction, delivery time, technical skills, software quality and risk management. Randomly gathered data were analysed using multiple regression and the ANOVA test. The aim was to evaluate the collective effect of these driving factors on the level of outsourcing by the various IT firms in Nigeria and the consequent growth of the sector in the country. It was discovered that the five factors collectively contribute to software development outsourcing and the growth of the IT industry. However, it was discovered that three factors, technical skills, risk management and software quality were the most significant going by the result of the t-test. It was therefore concluded that software development outsourcing has impacted the growth of the IT sector and the level of its implementation can be further increased. Government and the organised labour should make concerted effort towards the development of IT firms by encouraging software outsourcing. This will enhance efficiency of indigenous IT firms and inspired them to obtain up-to-date skills that meet globally accepted standards. In the long run, it will translate to increase in revenue potential.