Using Offshore Software Development

IT outsourcing or offshore software development is one of the quickest ways to get a job done and it will also prove to be less expensive than hiring your own staff. Whether you choose to go with the simple way of hiring a person to do a single task or hiring a firm for a large amount of work, using offshore software development as a means of expanding your business and saving money can prove to be very fruitful for your company.

Sites like freelancer and Elance allow you to hire someone for a single job. People from countries like Pakistan, India, the Philippines and Ukraine will bid on the job. These bids are visible so you benefit from everyone getting into a bidding war to get the job. As a result, you save money through IT outsourcing and you pay these people directly. No need to worry about meeting minimum state requirements for pay or even having to worry about taxes because it doesn’t apply.

If you are looking at setting up an office in a foreign country, it can often be difficult. This is because of language barriers and the political uncertainty of some countries, like Pakistan. You don’t want to go through the expense of setting up an office somewhere only to be involved in a political battlefield a month later. Using organizations from India like NASSCOM or Russia including RUSSOFT will let you experience offshore software development with helpful backing that takes care of all of the uncertainties for you.

Offshore software development can be both a time and a money savings for you, as long as you know what you are getting. There are definitely ways that it can be beneficial by using IT outsourcing but you need to know what you are getting yourself into, as well. There are some cons that you need to be aware of.

The time difference and language barrier of working with offshore software development can work to your advantage or not. The time difference means that people are working around the clock for you, whereas locally they must go home at some point. This also means that if you need to reach out to them during your business hours, they may be sleeping. Your options for handling this means as much as a 24-hour delay in communication or you working around the clock, too. The language barriers may not be as significant as you would expect as many of these people who participate in IT outsourcing speak very good English. Their grammar, however, may be severely lacking. Depending upon the offshore software development project they are working on, it may not even come in to play, but it could.

When you are aware of all of the pros and cons, you can then make an educated decision of whether offshore software development is right for your company or not. Your competition is most likely using them and saving a lot of money doing so. It can be a very lucrative business move, however anticipating potential problems before they arise will make the move even more lucrative.

Why India is a Favorite Offshore Software Development Destination

India’s share of the global offshore software development market is nearly about 44%. India exported IT and ITeS services worth more than $40bn in the year ended March 2008, a rise of nearly 20.65% over the previous year. STPI director general, N Krishnan, said the all-India tentative IT/ITeS exports stood at Rs 2,04,662 crore in 2008-09 as against Rs 1,80,155 crore in the previous year, registering a growth of 20.65 percent.

In today’s competitive world, the offshore model is viewed as more than just a TCO (total cost of ownership) factor. It enables companies to excel at their core competencies while delegating/outsourcing the other non-core aspects of the business to an outsourcing partner. The offshore, outsourcing model truly enables an ecosystem where everybody wins including the company, outsourcing vendor and most importantly, the customer.

Besides cost savings, other benefits include forming virtual teams with exceptional portfolio of workers from around the globe; ability to operate a business network with surety of maintaining the compliance of set standards; increased productivity as a result of having focused professionals working for a considerably lesser payout; and saving up on logistics, infrastructure, taxations, specialized resources and management manpower and costs.

What makes India different? India is the only developing nation in the world whose economy’s structure is similar to a developed economy structure. India generates 52% of GDP from services and that’s quite a unique thing. The primary reasons for this economic structure is the political, cultural and educational infrastructure India has developed over last 60 years.

The government of India has enabled an ecosystem including policies and political environment, which has been helpful in improving the infrastructure as well as communication required for offshore software development services. The government has been a great supporter for software firms by providing the basic infrastructure required for an outsourcing company to thrive thus playing a major role in contributing to the success and well-being of IT outsourcing to India.

On the cultural level, being a democratic and tolerant culture; Indian social framework has inculcated the basic ingredients required to provide effective services. As the base of Indian society is primarily based on co-existence with others, it’s natural when it comes to extending services to companies all over the world.

On the educational aspect, India has huge reserves of highly qualified and English speaking workforce with minimum education as bachelors and masters. The IT professionals are highly skilled and qualified in their respective streams. Some of the Indian universities are ranked among the top schools in the world.

With the internal market booming and the very favorable environment for offshore, outsourcing software development services; Indian software and BPO segment is expected to grow at a rate of more than 16 per cent to become a 132 billion-dollar industry by 2012.

Offshore Software Development

Developed countries like USA, UK, Germany etc, had been monopolizing IT initiatives. IT development in these nations kept taking quantum jumps every now and then, culminating in the present excellent position of use of IT tools and softwares in every sphere of activity, be it business, ecommerce, international trades,knowledge dissemination and education. But this did not last long. Big corporates in these nations were already looking for cheaper ways of developing IT applications. Prohibitive cost of labour, non-availability of skilled labour and huge funds outlay for developing more IT infrastructure, acted as deterrents for these companies. Once they stopped looking inside their own countries for cheaper skilled labour and high-quality infrastructure and started looking to third-world countries like India, China and so on, the search ended. The offshore software development boom had begun.Outsourcing became the rage of the times and outsourcing still continues to be the chief attraction for big application developers of the developed countries.

Offshore outsourcing of application development and other IT projects offer these overseas companies significant cost savings by providing access to cheaper skilled IT labor in countries such as India.The otherside of the coin was that by outsourcing application and software development to third world countries, the developed countries were laying themselves open for the risk of rising unemployment and disillusionment amongst the skilled workers of their own countries. However when new innovative approaches take root, they seldom take into consideration any sentiments or hurt emotions. The tide of offshore outsourcing swept away these weak objections and surged on as companies in USA, UK , Germany and France seized the opportunity to save 30 to 40% costs in application development. These multi-national companies and in some cases the governments themselves ventured forth to outsource their application development and other skilled-labour-intensive assignments to countries like India.

Due credit must be surely given to the countries like India, who have been silently moving towards the IT revolution by a paradigm shift in their governmental policies, focussing on IT education and training, IT infrastructure development and quantum leaps in communication technologies. These countries were ready when the outsourcing boom began. India and other developing countries had everything going for them- Abundant skilled human resources, well-established IT development centres with the state-of- the art technologies and hardwares,advanced communication technologies supported by dedicated communication technologies, assured long-term IT-friendly government policies and the additional bonus of being geographically placed in a favourable Time-zone. These factors led to the sprouting of talented , resourceful private players who stood to benefit from the flow of offshore outsourcing for application and software development assignments. According to Gartner, India has already outpaced all the other third-world countries in respect of volumes of outsourcing assignments ,foreign-exchange earnings and overwhelming advancement in all segments like increase in per capita income, standards of living and a fascinating economic growth rate.