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Quality Certification and the Economics of Contract Software Development: A Study of the Indian Software Industry
Any type of content formally published in an academic journal, usually following a peer-review process.
posted on 01.01.1999by Ashish Arora, Jai Asundi
A significant amount of software development is being outsourced to countries such as
India. Many Indian software firms have applied for and received quality certifications
like the ISO9001, and the number of quality certified software firms has steadily
increased. Despite its growing popularity among Indian software developers, there is
very little systematic evidence on the relationship of ISO certification to organizational
performance. Using data on 95 Indian software firms and drawing upon site visits and
interviews with Indian software firms and their US clients, we develop a stylized model
of a firm that develops software for others to articulate the different ways in which ISO
certification can affect firm profits. We conclude that ISO certification enhances firm
growth. The results provide partial support for the proposition that ISO certification also
enhances revenue for a given size, suggesting that firms are receiving a higher price per
unit of output. In turn, this is consistent with the notion that ISO certification also
enhances the quality of output. Our field studies confirm that although most firms see
ISO certification as a marketing ploy, some of them do proceed to institute more
systematic and better-defined processes for software development.