software outsourcing

A blog related to software development company and offshore software outsourcing

Sunday, June 05, 2005

Offshore outsourcing

Outsourcing is not a new issue although offshore outsourcing is new comparatively. Everybody outsource something and something ranging from house cleaning to high-tech jobs. Since last many years, software development and technical support jobs were outsourced to developing country where cost of labor is very low compare to developed countries. Recently this has moved to lesser technical functions like call centers, insurance claims and accounting and tax return management.

Every company is going for cost cutting now days. To reduce cost, US companies get temporary work visa for software developer and import him to US. That software development person learns specific needs, working and requirements of the company who has managed temporary visa for him. After that, he returns back to home and establish IT department for that firm in his home country. Once, this offshore IT department is operational, the colleagues who trained person are replaced. India is one of the biggest beneficiaries of offshore outsourcing wave. It has good universities, low cost highly educated and English speaking people. India is second next to US, when it comes to total count of English speaking population. Other countries like Ireland and Philippines are beneficiary and bigger countries like china and Russia are emerging in the market of offshore software development. Workers in Philippines are offering broad range of business services like customer call center / helpdesk, accounting, reviewing insurance claims and processing bills.

Till now outsourcing was just hiring outside firm to handle some specific or technical tasks which are not considered core competency for the business. Like a health Care Company outsource software development so that they can focus on their business more then internal software development. But this scenario changed with the evolvement of internet. It has brought world very close. Person sitting on another side of globe can work on software development without hassles and send / manage his work online. This changed outsourcing to offshore outsourcing.

Business man says, offshore outsourcing is nothing but a new trend of cost saving. It is beneficial for American economy in long run. Because companies can spend more money on core technology and R&D. Companies can do more savings and can invest more in cutting edge technology which can generate new high paying white collar jobs. On the other hand, labor advocates counter this offshore outsourcing with the argument that, offshore outsourcing is threatening US living standards by forcing those who lost jobs to overseas software developers by undertaking low wage jobs. In addition, this argument of offshore outsourcing was one of the big issues in last presidential election.

In US, companies do not require to report their offshore outsourcing practice to any governmental institute. So, estimation of job loss varies widely. Some reports say it is 300,000 of the total 2.4 million jobs lost in the year of 2001. That’s why one expert mentioned about offshore outsourcing that, even though economy is on recovery, it has not generated enough jobs. Supports of offshore outsourcing says, its a reflection of how US economy is evolving and in this phase, bumps in the road are expected. They say, an attempt to block hiring of foreign workers will hurt economy and American workers. America can loose its edge in cutting edge technology. On the other hand, offshore outsourcing allows global work force which serve clients round the close apart from cutting labor cost. And according to British information firm Data monitor, only 2% of the total call centers are working outside of the parent company's territory.

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