Software outsourcing and its future

Monday, June 20, 2005

A report by research and consulting firm Forrester Research mentions that jobs that are lost in the United States because of software outsourcing are primarily low salary IT jobs. These jobs are like software programming or computer support specialists or computer operators. But on the other hand, high end high paying jobs like system analysts, network analysts, and research analysts have seen continuous and stronger growth. Jobs in this niche market is growing steadily at a rate of 4 to 5% every year. These jobs which require stronger domain knowledge and knowledge of the internal working of IT systems and business processes are difficult for software outsourcing.

Which jobs will not get affected by Software Outsourcing

Jobs for software engineers for the position of system analysis and application implementation are also growing at a rate of 6% a year. This is because, though software outsourcing can be done to India or other offshore software development locations, customers require in-house staff for customization and maintenance of purchased software.

Why Software outsourcing will decrease

The report also mentions that the attraction of cost-saving in software outsourcing is yet very high and because of that, increase in jobs like software programmers will be very minimal. Also, because of the very low increase in software programming jobs, salary rise will also hardly 1% in the next few years. Salary of computer operators and database administrators will also grow at barely a 1% rate. On the other hand, the report also mentions jobs which will have the highest salary rise. Salaries of computer research scientists and information system managers will have the highest growth which will be around 3.5% every year. While salaries of analysts and system administrators will grow at the rate of 2 to 3% every year.

Conclusion about offshore software development

The report concludes with a note that software outsourcing which has major costs saving today will decrease by 2008. Because in the US the salary rise will be very less. While in India and other offshore software development destinations, because of the lack of availability of resources, salary rise will be very high. This will decrease the difference between the salary of Indian and US software engineers and eventually decrease costs saving. So many companies will prefer in-house resources rather than software outsourcing.