Software Outsourcing growthTuesday, September 06, 2005
According to advisory firm TPI, offshore software outsourcing is going to rise. This research has included around 100 senior UK executives who are responsible for software outsourcing within their companies. According to a survey, 81 percent of the total executives mentioned they plan to increase their offshore outsourcing over the next few years while only 4 percent mentioned that they will decrease it.
Although software outsourcing is increasing, research also revealed that large companies are choosing to offshore their IT related activities to India and china by starting their own wholly-owned subsidiaries rather than external service providers. Software outsourcing has grown, developed, and now matured as a trend in today’s business. Managing director, International Mr. Duncan Aitchison of TPI mentioned, “Our survey results clearly indicate that there is very little disillusionment with offshore outsourcing. What we can observe, however, is a general shift towards more sophisticated sourcing strategies as the global sourcing market comes of age. The growth of captives stems from companies now being more aware of how to conduct an offshore operation and less reliant on external service providers.” He also mentioned, the build, operate and transfer model is becoming the latest trend in the IT industry.
Survey also reveals that, many companies are taking global view of software outsourcing and separating process to decide what is best for offshore, near shore and onshore development. As outsourcing trend is increasing, UK buyers are seeing wider range of countries for offshore software development. Although India is a clear leader and used by 75% of the respondents, there is a close competition between central and eastern European countries and china for the second spot. Although currently used less, central and eastern European countries are rated attractive by 59% of the respondents. It is likely that, central and eastern European countries will increase their share in customer facing service for companies which are serving European market. Also, 41% of the respondents mentioned china as attractive location, although china is immature outsourcing destination and it lacks English speaking people. However, many companies are starting their subsidiary company in china.
This outsourcing survey also focused on failure rates. It mentioned that only 4% of the software outsourcing buyers are dissatisfied with the service while 42% are very satisfied. While widespread speculation is that, a very high percentage of buyers are unhappy. Survey also revealed that 48% of people believed that, outsourcing has improved customer satisfaction while 64% believed, organization planning has improved.