Under the present drastic competition in business world, outsourcing has become a trend of enterprises to attain the professional division of labor. Although information system outsourcing can reduce the development cost and increase efficiency for enterprises, lacking of control to the outsourced development process will bring negative effect to the enterprises, such as the delay of the project schedule and the increasing cost. In the process of information system outsourcing, the estimation of the cost for an outsourcing information system is a very important issue. However, so far there is no definite and objective method to estimate the outsourced software price in the software outsourcing processes. Consequently, most of the outsourced software development price is made by the subjective empirical judgment of the project managers. The primary objective of this thesis is to propose a ‘Reformed Software Outsourcing Process Model’ based on the famous function point analysis (FPA)-based software estimation technique. Such the ‘Reformed Software Outsourcing Process Model’ provides the below advantages: (1) Quality control: to quantify the project function points, development schedule and the related information and store them in the company’s knowledge base. This information can be used as a very important basis for selecting and evaluating outsourcing vendors. (2) On time and cost control: to measure the software size by the objective and quantified function point. Different outsourcing vendors can modify their organization’s parameters to make reasonable adjustment based on the history data in the knowledge base in order to get the closest estimate for the software development cost. A case study provided by a Taiwan application service provider is also presented in this thesis to demonstrate the usefulness of our proposed ‘Reformed Software Outsourcing Process Model’. This case study estimates the software development effort of an outsourced project as well as compares it with the actual working hours in order to verify the usability and reasonability of the reformed outsourcing processes proposed in this thesis.
