A Software Life-Extending Outsourcing Model: An Ethnographic Action Research of a Product Transformation for a European Telecom Equipment Manufacturer

Maximizing returns on software development costs have been a prime objective of product organizations. As the products mature, the organization explores alternatives to extend an existing product's life or retire it from its product portfolio. This article examines the changing trends of the outsourcing model for software product organizations based on a product's lifecycle and technology maturity. Adopting an ethnographic action research methodology, we study the journey of a software product's (re)aligning outsourcing strategy while evolving a parallel strategy for retiring products by either shifting focus from fixed to variable costs or monetizing them as “software assets.” As part of the conclusion, a software life-extending outsourcing model has been proposed based on the specific phase of product development and technology maturity. The article includes research implications for practice and academia in strategizing outsourcing based on a product's development phase.