ORGANIZATIONAL AWARENESS AND 
FACTORS AFFECTING DEVELOPMENT OF 
BUSINESS DOMAIN KNOWLEDGE OF IT 
PROFESSIONALS IN SRI LANKAN OFFSHORE 
SOFTWARE ORGANIZATIONS  
 
 
 
By 
 
 
 
Dimani Shashiprabha Senanayake 
 
 
 
 
The Dissertation was submitted to the Department of Computer Science 
& Engineering of the University of Moratuwa in partial fulfillment of the 
requirement for the Degree of Master of Business Administration in 
Information Technology. 
 
 
Department of Computer Science & Engineering 
University of Moratuwa 
December 2009
ii 
 
 
DECLARATION 
 
“I hereby certify that this dissertation does not incorporate, without 
acknowledgement, any material previously submitted for a Degree or Diploma in any 
University and to the best of my knowledge and belief, it does not contain any 
material previously published or written by another person or myself except where 
due reference is made in the text. I also hereby give consent for my dissertation, if 
accepted, to be made available for photocopying and for interlibrary loans, and for the 
title and summary to be made available to outside organizations.”  
 
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Signature of the Candidate                                               Date 
 
To the best of my knowledge, the above particulars are correct. 
 
 
 
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Signature of the Supervisor                                             Date  
 
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Signature of the Co-Supervisor                                      Date 
iii 
 
ABSTRACT 
Offshore software development projects play a major role for the sustainability of Sri 
Lankan IT industry drawing high revenues to the country‟s economy and providing 
employment for youth. In a highly competitive global market, it is essential that Sri 
Lankan offshore software development organizations produce high quality, cost 
effective products and services meeting the expectations of overseas customers, in a 
timely manner. However, knowledge gaps between client and vendor affect 
negatively on software quality and client satisfaction. This characteristic of offshore 
development is a challenge faced by offshore vendors all over the world. Inter-
organizational knowledge transfer process, which will help to alleviate this problem to 
some extent, was researched in previous studies (McLaughlin, et al 2008). However, 
there is no empirical evidence in the area of offshore outsourcing software 
development in the Sri Lankan context. 
From the vendors‟ perspective, this study identified the factors, which impede the 
process of business domain knowledge transferring from client to IT professionals of 
Sri Lankan offshore software development vendors. The level of organizational 
awareness on the significance of building business domain knowledge of IT 
professionals and factors influencing building business knowledge of IT professionals 
of vendor organizations were also evaluated. A conceptual framework segmented into 
organizational and functional levels was used in this study to realise the objectives. A 
survey among different stakeholders of offshore software development organizations 
was carried out in 31 organizations in Sri Lanka. 
Data indicated a high organizational awareness level on the significance of building 
business domain knowledge of IT professionals. However, research findings revealed 
factors such as Perceived Cost of Business Domain Knowledge Transfer, Client 
Reluctance, Perceived Client Knowledge Deficiency and Inflexible Time Schedules 
would make a negative impact on building business domain knowledge of IT 
professionals. A project factor “Conceptual Novelty”, has been found to be an enabler 
for the organizations to initiate the building up process of the business domain 
knowledge of IT professionals. 
iv 
 
ACKNOWLEDGEMENT 
The pursuance of my MBA has been a journey of immense happiness and difficulty to 
me. In the hardest part of that journey, the thesis research, I was guided by my main 
supervisor, Dr Chandana Perera, who helped me to conduct an organized and 
methodical research. I am greatly indebted to his kind assistance. I also wish to 
express my gratitude to my co-supervisor, Ms Vishaka Nanayakkara, who guided me 
in the research work with emphasis on quality and adherence to standards that 
immensely helped me to complete the research work to the satisfaction of the 
examination panel. I am grateful to my examination panel, Dr Chandana Perera 
(Head, Department of Management of Technology), Dr Chathura De Silva 
(Department of Computer Science & Engineering), and Mr Chandana Weerasinghe 
(Managing Director, DMS Electronics Ltd), that provided valuable feedback for the 
finalization of the thesis. 
I wish to thank the Ms Vishaka Nanayakkara, Head of the Department of Computer 
Science & Engineering of the University of Moratuwa and the other staff members for 
selecting me to follow the Degree of Master of Business Administration in 
Information Technology and the lecturers who taught me in the course of study. 
During the research work, I sought advice and knowledge from several lecturers of 
my course of study and I am much thankful to them for accommodating my requests. 
I would like to specially thank Prof Kennedy Gunawardena and Mr Duminda 
Kuruppuarachchi for their valuable guidance. 
I appreciate very much the help rendered by Mrs. Sujatha Weerkoon, the Director 
General, Sri Lanka Export Development Board, Mr. Vidarshan Fernando, Director of 
the Board of Investment, Mr. Mano Sekaram, Chairman, Sri Lanka Software 
Foundation, and many CEOs of the Software Development Companies for providing 
me with relevant information and data. I am indebted to all those Managers and IT 
Professionals of Software Development Companies who obliged to participate in my 
research survey, without their help, I would not have been able to complete this 
research project successfully. 
I am thankful to my family and friends at my workplace who have helped me in 
numerous ways to complete this project fruitfully. 
v 
 
TABLE OF CONTENTS 
 
DECLARATION…………………………………………………………….………......ii 
ABSTRACT…………………………………………………….……………….….…...iii 
ACKNOWLEDGMENT…………………………………………………….……….....iv 
LIST OF TABLES……………………………………………………………………...vii 
LIST OF FIGURES…….……………….……………………………………................ix 
LIST OF ACRONYMS…….……………….…………………………….………..........x 
1. INTRODUCTION .................................................................................................. 1 
1.1. Background of the Study ................................................................................... 1 
1.2. Motivation ........................................................................................................ 3 
1.3. Problem Statement ............................................................................................ 5 
1.4. Research Objectives .......................................................................................... 6 
1.5. Significance of the Study .................................................................................. 6 
2. LITERATURE REVIEW ...................................................................................... 8 
2.1. Basics of Business Domain Knowledge ............................................................. 8 
2.2. Role of Business Domain Knowledge in Software Development ..................... 10 
2.3. Deficiencies in Requirement Elicitation Phase................................................. 11 
2.4. Significance of Business Domain Knowledge for IT Professionals .................. 12 
2.5. Impact of Business Domain Knowledge on Software Quality and Software 
Development Performance ......................................................................................... 14 
2.5.1. Case of Word Perfect................................................................................ 15 
2.5.2. Improve Software Project Performance through Organizational Learning . 16 
2.6. Knowledge Delivery Models in Software Development Outsourcing .............. 17 
2.7. Challenges Faced by Vendor during Knowledge Transferring in Offshore 
Outsourcing Model. ................................................................................................... 20 
2.7.1. Cost of Knowledge Transfer ..................................................................... 22 
2.7.2. Project Constraints ................................................................................... 23 
2.7.3. Client – Vendor Relationship .................................................................... 23 
2.7.4. Credibility of Source of Knowledge ......................................................... 23 
2.7.5. Availability of Source of Knowledge ........................................................ 24 
3. RESEARCH DESIGN .......................................................................................... 25 
3.1. Conceptual Framework ................................................................................... 25 
3.2. Tier One – Organizational Level ..................................................................... 26 
3.2.1. Cost of Business Domain Knowledge Delivery ........................................ 26 
3.2.2. Management Awareness of the Significance of Business Domain 
Knowledge for IT Professionals .............................................................................. 27 
3.2.3. Availability of Different Modes of BDK Transfer..................................... 27 
3.3. Tier Two – Functional Level ........................................................................... 28 
vi 
 
3.3.1. Client Reluctance ..................................................................................... 28 
3.3.2. Perceived Client Knowledge Deficiency ................................................... 28 
3.3.3. Unavailability of Knowledge Source ........................................................ 29 
3.3.4. Conceptual Novelty .................................................................................. 29 
3.3.5. Inflexible Time Schedules ........................................................................ 30 
3.3.6. Level of Business Domain Knowledge of IT Professionals ....................... 30 
3.4. Hypothesis Development ................................................................................ 31 
4. METHODOLOGY ............................................................................................... 35 
4.1. Sample Design ................................................................................................ 35 
4.2. Operational Measurements of Variables. ......................................................... 37 
4.2.1. Awareness of the Significance of Business Domain Knowledge ............... 37 
4.2.2. Cost of Business Domain Knowledge Transfer ......................................... 39 
4.2.3. Availability of Different Modes of BDK Transfer..................................... 39 
4.2.4. Client Reluctance ..................................................................................... 40 
4.2.5. Perceived Client Knowledge Deficiency ................................................... 41 
4.2.6. Unavailability of Knowledge Source ........................................................ 41 
4.2.7. Conceptual Novelty .................................................................................. 41 
4.2.8. Inflexible Time Schedules ........................................................................ 42 
4.2.9. Level of Business Domain Knowledge of IT Professionals ....................... 42 
4.3. Reliability Testing ........................................................................................... 42 
5. ANALYSIS ........................................................................................................... 46 
5.1. Data Analysis Methods ................................................................................... 46 
5.2. Descriptive Statistics ....................................................................................... 46 
5.2.1. Frequency Distributions ........................................................................... 47 
5.2.2. Measures of Central Tendencies and Dispersion ....................................... 54 
5.3. Inferential Statistical Analysis ......................................................................... 59 
5.3.1. Management Perceived Cost of Business Domain Knowledge Transfer .... 60 
5.3.2. Management Awareness of the Significance of Business Domain 
Knowledge for IT Professionals .............................................................................. 62 
5.3.3. Client Reluctance ..................................................................................... 63 
5.3.4. Perceived Client Knowledge Deficiency ................................................... 66 
5.3.5. Unavailability of Knowledge Source ........................................................ 67 
5.3.6. Conceptual Novelty .................................................................................. 68 
5.3.7. Inflexible Time Schedules ........................................................................ 69 
6. DISCUSSION AND CONCLUSION ................................................................... 71 
6.1. Discussion ....................................................................................................... 71 
6.2. Recommendations ........................................................................................... 74 
6.3. Future Work .................................................................................................... 76 
6.4. Limitations of the Study .................................................................................. 77 
REFERENCES ............................................................................................................ 78 
APPENDIX .................................................................................................................. 81 
vii 
 
 LIST OF TABLES 
Table 1.1: Standish Groups CHAOS Report Statistics....................................................2 
Table 2.1: Knowledge Delivery Model in Software Development Outsourcing 
Categorized by Location .............................................................................................. 18 
Table 2.2: Cost-benefits of Delivery Models ................................................................ 19 
Table 3.1: A Summary of Hypothesized Relationships................................................. 34 
Table 4.1: Sample Derivation ...................................................................................... 36 
Table 4.2 : Operationalization of Awareness Variable .................................................. 37 
Table 4.3: Operationalization of Availability of Different Modes of BDK Transfer ..... 40 
Table 4.4: Operationalization of Client Reluctance ...................................................... 40 
Table 4.5: Reliability Statistics for Cost of BDK Transfer ............................................ 43 
Table 4.6: Reliability Statistics for Management Awareness of the Significance of 
BDK ............................................................................................................................ 43 
Table 4.7: Reliability Statistics for IT Professional Awareness of the Significance of 
BDK ............................................................................................................................ 44 
Table 4.8: Reliability Statistics for Perceived Client Knowledge Deficiency ................ 44 
Table 4.9: Reliability Statistics for Unavailability of Knowledge Source ..................... 44 
Table 4.10: Reliability Statistics for Inflexible Time Schedules ................................... 45 
Table 4.11: Reliability Statistics for Level of BDK of IT Professionals ........................ 45 
Table 5.1: Hypothesis Testing Techniques used for Inferential Analysis ...................... 46 
Table 5.2: Frequency Analysis for Type of Role for Management................................ 47 
Table 5.3: Frequency Analysis for Type of Role for IT Professional ............................ 47 
Table 5.4: Frequency Analysis for Personal Experience in Industry for Management ... 48 
Table 5.5: Frequency Analysis for Personal Experience in Industry for IT Professional48 
Table 5.6: Frequency Analysis – Number of Years in Business in Local IT ................. 49 
Table 5.7: Frequency Analysis – Company Category ................................................... 50 
Table 5.8: Management Perception on the Importance of Business Domain 
Knowledge by Role ..................................................................................................... 52 
viii 
 
Table 5.9: IT Professional Perception on the Importance of Business Domain 
Knowledge by Role ..................................................................................................... 52 
Table 5.10 : Management Perception on the Importance of Business Domain 
Knowledge by Software Development Phase ............................................................... 53 
Table 5.11: IT Professionals Perception on the Importance of Business Domain 
Knowledge by Software Development Phase ............................................................... 53 
Table 5.12: Measures of Central Tendency and Dispersion -Management Survey 
Data. ............................................................................................................................ 54 
Table 5.13: Measures of Central Tendency and Dispersion -IT Professional Survey 
Data.. ........................................................................................................................... 55 
Table 5.14: Descriptive Statistics of Management Awareness on the Significance of 
Business Domain Knowledge ...................................................................................... 58 
Table 5.15: Descriptive Statistics of IT Professional Awareness on the Significance of 
BDK ............................................................................................................................ 58 
Table 5.16: Analysis of Variance - Management Perceived Cost of BDK Transfer and 
Level of Availability of Different Modes of BDK Transfer .......................................... 60 
Table 5.17: Multiple Comparisons of Mean Values between Levels of Availability of 
Different Modes of BDK Transfer ............................................................................... 61 
Table 5.18: Analysis of Variance - Management Awareness of the Significance of 
BDK and Level of Availability of Different Modes of BDK Transfer .......................... 62 
Table 5.19: Analysis of Variance – Level of Business Domain Knowledge in the 
Project and Level of Intensity of Client Reluctance. ..................................................... 63 
Table 5.20: Multiple Comparisons of Mean Values between Difference Levels of 
Client Reluctance ........................................................................................................ 65 
Table 5.21: Correlation Matrix between Perceived Client Knowledge Deficiency and 
Level of BDK of IT Professional in the Project ............................................................ 66 
Table 5.22: Correlation Matrix between Unavailability of Knowledge Source and 
Level of BDK of IT Professional in the Project ............................................................ 67 
Table 5.23: Analysis of Variance – Level of Business Domain Knowledge in the 
Project and Conceptual Novelty. .................................................................................. 68 
Table 5.24: Multiple Comparisons of Mean Values between Difference Levels of 
Conceptual Novelties ................................................................................................... 69 
Table 5.25: Correlation Matrix between Inflexible Time Schedules and Level of BDK 
of IT Professional in the Project ................................................................................... 70
ix 
 
 
LIST OF FIGURES 
 
Figure 2.1: Two key types of knowledge in software development ........................... 9 
Figure 2.2: Process of Requirement Analysis .......................................................... 10 
Figure 2.3: Knowledge integration in a software development project. ................... 12 
Figure 2.4: Role of Business Coach in Agile Environment ...................................... 14 
Figure 2.5: Offshore Outsourcing Problems & Severity in US based Companies .... 21 
Figure 3.1 : Conceptual Framework ........................................................................ 25 
Figure 5.1: Frequency Analysis – Number of Years in Business ............................. 49 
Figure 5.2 : Frequency Analysis -Business Domains Served by the Companies ...... 50 
Figure 5.3: Different Mechanisms used for Business Domain Knowledge 
Development by Percentage.................................................................................... 51 
 
x 
 
 
LIST OF ACRONYMS AND NOMINAL DEFINITIONS 
 
BDK - Business Domain Knowledge. 
BOI - Board of Investment, Sri Lanka. 
CMMI - Capability Maturity Model Integration 
Customer 
/ Client 
- Party that outsources its software development work or any other IT 
service to another party. 
EDB - Export Development Board, Sri Lanka. 
IT - Information Technology. 
TQM - Total Quality Management 
UML - Unified Modeling Language  
Vendor - Outsourced party, which will carry out the software development 
activities on behalf of Client.