Offshore Software Development Trends in 2012

The Drivers of Offshore Software Development

The offshore Software development trend has been around for a while now and many IT as well as non-IT companies all over the world are engaged in outsourcing their software development needs to offshore software development centers due to the various benefits provided by the outsourcing process. One of the leading drivers of this trend has been the reduced cost factor associated with the outsourcing process in general. During the credit crunch caused by the global financial crisis, companies were focused on reducing costs and the offshoring process helped reduce overheads and improve the outsourcing company’s bottom line. In other cases, non-IT firms with no or minimalist IT departments also outsource their software development requirements as developing such software in-house often tends to be cost prohibitive. The lack of expertise of a company with regard to use of a specific set of software tools/platforms necessary for developing one or more applications is another driver commonly associated with such outsourcing. Such non-IT firms include industries from a wide range of sectors including but not limited to transport and logistics; education; healthcare as well as banking and financial services. Each of these sectors and even companies within the same sector, however, require unique solutions suited to their own needs. Many organizations also follow a blended approach by mixing outsourcing with in-house expertise to develop the necessary solutions.

Leading Offshore Software Development Priorities

Many companies across the world are currently engaged in developing new software products/applications according to the requirements of clients. New software development is expected to account for a major portion of the software revenue in 2012 and beyond. A close second is the requirement for companies to upgrade their existing software application by integrating new technologies/modules into their already deployed solutions. In 2012, the integration aspect is expected to gain more ground as new technologies/applications increase the benefits provided to organizations by the current solutions. The main benefit of such integration is the reduced deployment time for the company as well as the decreased cost of development as compared to in-house development. The consumerism of IT (CoIT) trend is also beginning to affect the market as users demand a superior user experience delivered by these solutions. As the market for solutions which go beyond delivering basic functionality expands in 2012 and beyond, the focus of many an offshore software development company is expected to shift towards using new technology to develop better User Interface (UI) and graphics for solutions, which were deployed earlier in the enterprise. Such development is often classified as custom software development, is also expected to witness robust grow among offshore development companies in the year 2012 as well as the recent future driven by increases demand across multiple industries.

Other key functional areas for offshore software development operations include performance improvement-based software development as well as the continued maintenance and support for existing solutions. As more and more companies deploy software solutions in order to gain a competitive advantage in the intensely competitive market, the number of performance enhancement contracts between organizations and offshore software development firms is expected to increase. Another software development area expected to witness rapid growth in 2012 is the development of dedicated mobile apps. The focus on developing apps for mobile is expected to continue in the recent future driven by increased enterprise mobility requirements and the growing adoption of BYOD (bring your own device) philosophy by enterprises. A related area which is forecast to grow in 2012 is the development of cloud apps for use by the enterprise as well as the development of improved security solutions to ensure superior data security and compliance with all existing regulations of data protection.

Leading Deployment Areas for Software developed at Offshore Locations

The requirement of software developed by offshore centers is not limited to any specific industry therefore the list of probable deployment areas is quite large and expected to grow further in 2012 as technological advancements open up new application areas. However, the development of data storage/management/Business Intelligence software is expected to be the leading business area for offshore software developers in 2012. Such solutions are deployed by a wide range of industries to cope with the explosion of digital data and facilitate an informed decision-making procedure, which is expected to propel continued growth of the Business Intelligence solutions market. Other leading deployment areas for software developed at leading offshore locations include applications required by the financial and healthcare sectors as well as solutions deployed for managing processes/projects and applications which are necessary to facilitate enterprise-wide networking and communications. Other areas of interest for these companies in 2012 include applications for facilitating the deployment of e-commerce, CRM, content (document) management platforms, online analytics etc. Overall, in 2012 and beyond, the industry is expected to witness robust growth as companies increase their IT expenditure with the intention of gaining a competitive advantage in the market.

Development Platforms Preferred by Outsourcing Enterprises

Among the available software/application development platforms currently in use today, internet/web-based development platforms are expected to dominate the offshore development market in 2012. However, enterprise application development platforms and SaaS/Cloud-based platforms are also expected to witness growth as more organizations issue contracts for new solutions based on these emerging platforms. The emergence of BYOD is also expected to result in the development of various mobile platform-based applications in the recent future, while desktop application and embedded platforms are expected to witness only marginal growth in 2012 due to the perceived restrictions inherent to these platforms.

Leading Offshore Destinations around the World

Over the years, India has traditionally been the leading offshore software development destination for firms based in the US and Europe. This situation is not expected to change in 2012 even though emerging players are expected to partially erode India’s current lead in the global offshore development market. Emerging markets, where organizations are currently outsourcing their software development requirements include Central and South America mainly Brazil and Mexico; various countries in Eastern Europe; China; countries in the Asia-Pacific region such as Philippines, Indonesia, Vietnam; as well as Russia and Ukraine. Over the next few years, these emerging players are expected to provide stiff competition to software development centers based in India. The key criterion for competition among these offshore development centers is forecast to include overall cost, development quality, project/client handling procedures and the total development time required. However, even in the face of such challenges, India is expected to retain a dominant position in the global offshore software development market in the year 2012 as well as in the recent future.