software outsourcing

A blog related to software development company and offshore software outsourcing

Wednesday, July 27, 2005

India and China in software outsourcing

Before few years, when some American companies opened their offices in china for software outsourcing and hired Chinese programmers for offshore software development, initial response from their prospective clients was not good. At that time, all western companies were looking for software outsourcing to India. Because, India was very successful in offshore software development and people were very much satisfied with Indian programmers for their coding related work.

But with the number of US companies increasing their operations in India, wages in India are going high. It has also increased manpower turnover and in turn delivery problems. Because of which, clients are seeking for alternatives like china, Philippines, Russia, Poland, Romania etc. In a survey by management consulting company DiamondCluster, in 2004 not a single company mentioned that they are outsourcing software development to China. But in the year 2005, 6% companies mentioned they are in china. Companies which are expected to open software outsourcing operations in China have risen from 8% to 40% in just one year. Bigger attraction for china is, its reliable infrastructure and skilled workers. Although wages in developed cities like Shanghai have gone up, overall they have remained lower then India's. But biggest obstacle in their path is deficiencies in English fluency unlike India.

On the other hand, many Indian companies have started their operations in China. Infosys is planning to have office near to Shanghai. Accenture is also looking at china. And cost of a development center in china is 25% lower then cost of Indian development center. Although, it is considered that, India will move up in the ladder and handle more consulting work.
Friday, July 08, 2005

Offshore Outsourcing

In US many research are mentioning that, by the year 2015, 3.3 million jobs in business process will move abroad. And those research also mentions that, jobs going offshore will accelerate at the rate of 30 - 40% every year. But these researches are without proper basis. As most of the jobs require consumer and service provider to be at the same place. Those jobs which move offshore should be considered as a part of economic restructuring. In long term jobs which are moved offshore for offshore outsourcing, generally will save millions of dollars which improves economy.

Offshore Outsourcing


So controversy around offshore outsourcing as the reason for job loss in US is more a political issue rather then reality. India has around two hundreds and fifty thousand employees working in business process outsourcing. This number is not such a big that, it can become a threat to 100 million workers in US service sector. And American companies are very much eager to tap the cheaper labor source to do offshore outsourcing and compete globally.
Monday, July 04, 2005

Software Outsourcing

In 2004, 75% of the US companies did software outsourcing of all or some part of their information technology work. And with software outsourcing booming, in the year 2005, that will increase. This was mentioned in a report on outsourcing and offshoring by Horasis and Going Global Ventures. Out of those 75% companies only 32% companies have done software outsourcing to offshore and half of them have cut their full time jobs.

Software outsourcing to India

For software outsourcing, India is the most popular destination. And it will remain leader in the year 2005 too. But according to the report China will be the leader in next ten years. This report also rank countries base on their risk, costs and opportunities for software outsourcing for now and also for the future. This report was compiled by Frank Jrgen Richter, president of horasis and Mark Minevich who is international strategic advisor and principal at Going Global Ventures. Going global is US based consulting and venture advisory firm while, Global visions community is a geneva based strategic advisory firm. Software outsourcing is a very hot issue because of fears of job loss. Because of that there is high oppose to it politically as well as by some organizations. But costs saving is such a huge that, corporates are going to work on this strategy. But corporates need to look at benefits, cultural difference, costs saving, risks etc. for each country.

Report mentions that, currently India, china, costarica, Czech Republic and Hungary are the top 5 destinations for software outsourcing. But in 2015, China, India, US, Brazil and Russia will be the top 5 countries for software outsourcing. Report was prepared using two different indexes - glbal outsourcing index - GOI and future outsourcing rank FOR. The GOI index is made up of cost of doing business in each country, risks associated with it and market opportunities. While future outsourcing index was made up of assesses the long term competitiveness of the top 30 future outsourcing countries.
Sunday, July 03, 2005

Software Outsourcing

There is a huge political oppose in US about software outsourcing. Yet software outsourcing will continue and according to Gartner research firm, out of every four high technology jobs in developed countries like US, one will be outsourced to developing country like India by 2010. Although, china and Russia are emerging, India is yet undisputed leader in software outsourcing. Gartner also mentioned that, growth in offshore outsourcing to India is the biggest shift in Information technology field in the near term. Now a days, offshore outsourcing has became a part in strategy of business not just cost cutting mean. Global sourcing is becoming mainstream delivery model for businesses. Companies which are not considering software outsourcing are risking their share holder's advantage. Because cost saving is very high in offshore outsourcing.

Offshore outsourcing

Software Outsourcing is booming in US and now it is catching up in Europe also. In 2005 first quarter, Europe was ahead of US in software outsourcing due to the major deal of British telecom. With the increase of outsourcing from Europe and specifically from countries like UK and France, it is very clear that, companies are overcoming the cultural resistance.
Friday, July 01, 2005

Software outosurcing and product development

Indian software outsourcing companies are providing offshore software development since over a decade. That has matured offshore software development process and now, with the rise of rupee against dollar, cost advantage is getting lesser. To counter this, indian companies are required to offer business process consulting and product development services rather then just providing coding services offshore. Many indian companies like i-Flex are trying to get a market in product development and move up in the value chain.
With indian companies trying to move up towards niche market, outsourcing product development is emerging as the very attractive market for them. Software outosurcing for product development is the latest trend catching up and many established as well as startup companies are going for offshore outsourcing for their product development. Startups funded by venture capitalists asks for indian outsourcing first. Many VCs are funding enterpreneurs who have good knowledge of their domain and who partner with Indian software outsourcing company to provide low cost high quality solution.

Startups who want to do product development comes with just requirements and vision. This becomes a very challenging task to create a successful product from it. And Indian companies are getting substantial experience with offshore product development. Europe has specially not enough skills for the product development. Many european companies are increasing their product development to India. India has a wide talent pool. So offshore product development is going to increase and will become main trend in the year 2005.
Friday, July 01, 2005

Software outsourcing

Software outsourcing to India

With the booming business of software outsourcing to India, Indian companies are now starting to compete with global service providers like IBM, Accenture and HP. Indian offshore outsourcing companies are facing challenge of scaling up their offshore software development center as per client requirements and getting new contracts. With the expertise they have got by providing third party software development services to some of the major service providers, they have gained expertise and experience to compete for the contracts of fortune 500. And with low cost, this has opened option for fortune 500 companies to consider offshore outsourcing to India.

In their quest for the multinational giants, Indian software outsourcing companies have improved their quality standards tremendeously. India has maximum number of CMMi level 5 companies then any other country in the world. Indian companies have clear focus on software outsourcing objectives, understanding offshoring process and experience of managing cultural challenges.

With gaining expertise from software outsourcing, Indian companies have now targetted business consulting and R&D work for their clients. Previously only low-end work like programming, designing and web development was coming to India. But now a days, indian companies have started product development and R&D work along with application development. But along with this, challenge has came to recruit best suitable minds in technology. Although india is producing more then 3 million college graduates every year, majority of them are not good enough to work on high-end technology.

Although, countries like china are producing high number of graduates, china is producing around 50,000 engineers every year compare to india's around 300,000 engineers every year. And although all engineers coming out of college are not good enough, it is considered that, overall quality of Indian engineers is very strong. That is why, software outsourcing was started to save software development cost. But Indian companies proved that, along with cost, there are many other benefits in software outsourcing.