Title: Strategic outsourcing of Software Development - Challenges in innovation work Authors: Josefine Erlandsson and Sanna Seilonen Tutor: Petra Andersson Examiner: Helena Forslund

Background: Recent research emphasizes the importance of global knowledge based assets. Global software development is a trend in software engineering, it provides many benefits but also challenges in communication, control and coordination. Innovation processes are hard to define but the link between software development and innovation work is discussed by many researchers today.

Purpose: The purpose of the thesis is to describe and analyze how multinational IT-enterprises manage their outsourcing strategies of software development, which problems are connected to the subject and the different types of models used within software development.

 Methodology: This thesis was written using qualitative semi-structured interviews and a deductive approach. The case study was conducted using data from a multinational enterprise in Sweden and cross-case analysis was performed after categorizing hundreds of suppliers into three main types through pattern matching.  

 Conclusion: The strategies used by multinational enterprises in outsourcing of software development are both centralized and decentralized and based on oral communication or documentation. Problems that enterprises face are connected to geographical distance and could be human resource issues, accuracy of information or appropriateness of information. The software development models used could be categorized into two main types, traditional or agile way of developing new software code.