software outsourcing

A blog related to software development company and offshore software outsourcing

Wednesday, June 29, 2005

Offshore India

More and more offshore software outsourcing  work is going to India because India offers many more advantages. There is a lot of negative press coverage, some political oppose and scams like recently exposed by a UK based news paper. Yet, India is maintaining its edge in offshore software outsourcing. Many factors affect this advantage of India like its price, quality, economic policies of Indian government, big English speaking population.

Offshore India software development companies

To match the expectations of global multinational companies, Indian companies started implementing CMMi Maturity Level 5 quality assurance procedures and today, India has highest number of CMMi Maturity level 5 software development centers. Rather then providing raw low quality low cost coding, Indian companies are determined to provide quality coding at higher cost. Indian software companies are increasingly adopting the standards of US companies to provide quality.

Although, in offshore outsourcing deal, quality is not a very important factor. Once a client and service provider starts working together, and software outsourcing service provider starts providing good service, customer generally continue with the same vendor for longer term. Generally clients don’t leave software outsourcing service provider unless there is a huge difference in cost by other providers or something goes dramatically wrong. Offshore software development companies are now a days continuing to improve their quality process. Because, they understand the importance of achieving domain expertise and quality along with specialization rather the one stop for all service.

In India, cost of programmers is increasing rapidly. Every year 15-20% increment in salary is lot higher then programmers in US who get around 2-3% increase in salary. But an Indian programmer gets around 25% of the salary of his American counterpart. As this difference is very high, there is enough room to grow for Indian offshore software development companies. Along with the cost, Indian companies also started recruiting their managers from US and other countries. This reduces cultural difference between client and offshore outsourcing team.
Tuesday, June 28, 2005

Software outosurcing and Offshore India

Software outsourcing to India has continued to grow in last few years. This growth is driven by many factors. Cost saving is not the only factor for software outsourcing. But it is the major factor in outsourcing. There are many factors which are contributing to cost savings in India. One of the most important issues is difference in salary of a programmer in Europe or in US and a programmer in India. Indian programmer gets less then 25% of the salary of a US programmer. This is the main factor which is driving software outsourcing to India.

Offshore India

Software companies belong to knowledge based industry. Unlike traditional brick and mortar industry, here, it is not required to invest heavily upfront and there is no material cost in running production. So majority of the cost is the salary. It contributes anywhere to 60-80% of the total expense of any software company. So when a company hire programmers in US, cost of software development shoots up to 60-70%. That is why 'Offshore India' is more preferred. Many companies prefer to offshore their development works to nearshore destinations like Canada instead of offshoring to India. But that offshore outsourcing generally reduce their cost saving to nearly 50%. Asian countries are considered preferred destination for offshore outsourcing. While Eastern European and Latin American countries and Canada is considered good for Nearshore operations. In future, high-end services will move to nearshore or onshore while low end services will be done at offshore and specially in India.

In India, software developer doing offshore software development generally gets 15 to 25% salary rise now a day depending on his importance in projects. While in US, a programmer gets yearly 3% increment approximately. Although, salary rise in India is very high, difference between salary of Indian programmer and a programmer in US is such a wide that, cost saving will continue to be a major factor in software outsourcing.
Sunday, June 26, 2005

Software Outsourcing and India

There are many opposing offshore software outsourcing. But every company should consider software outsourcing. Because Software Outsourcing is mega trend and it is changing how business is performed. Cost difference is such a low that, developing countries which can offer highly skilled but low cost educated software programmers can reduce software development cost very low and can provide faster time to market. This offshore software outsourcing is not just for big companies which have millions of dollar turnover but it can benefit small companies too. So, it is myth that, only large corporations can only benefit from software outsourcing.

Why software outsourcing India

India has very large education system which produces above 3 million graduates every year. Apart from that, India has highest number of English speaking people after United States which is a key factor in the growth of Indian outsourcing market. Offshore outsourcing started in India way back in 90's and since then it has grown and matured the outsourcing process to match standards like CMMi Level. Many big companies like General Electric and British airways were the first to start business processing center in India before many years to reduce the cost. Although, at present, there is oppose on offshore outsourcing, many giant US companies have shifted their important back office work to India. That gives geopolitical stability as US will prefer to avoid tension with India on this issue. So, also there is some risk, actual risk compare to benefits is negligible.
Saturday, June 25, 2005

Software Outsourcing

How india is in advantageous position in software outsourcing?
India has became leader in software outsourcing. It is i preferred offshore outsourcing destination. Because it moved early then other countries in that direction. While other early adapters like Philippines are preferred for services like help desk and call centers, canada is preferred for nearshore destination for software outsourcing. Canada is safe and and strong for clients whom price is not very important.
Russia has now stable economy and strong education system. So Russian market is growing because of highly skilled and educated labour is available in considerable size. Eastern european countries like Czech republic, hungary or poland are increasing their share but they are more concentrated in providing software outsourcing services to western european countries. Also, they have very small baze of population in offshore software development. Only china is growing at fast pace and it is anticipated that, it will compete with India in next few years and will overtake India by 2015.

Offshore India : There are many other countries which are trying to grow in this software outsourcing business. But to emerge int this market and mature rapidly in offshore outsourcing is not a quick process. Maturity in offshore software development process takes its own time. As india started 'offshore India' software development long back, Indian outsourcing industry has evolved with time and matured to meet highest standards in the world. The most challenging question when any corporation go offshore is, how to select offshoring destination. There are many issues to be considered while selecting offshoring destination and offshore software development company. Click on why software outsourcing to India? is more preferred compare to other destinations.
Thursday, June 23, 2005

Software Outsourcing and India

Why software outsourcing to India

Majority of fortune 500 companies are considering India as their preferred destination for software outsourcing. India has emerged as a 'value-for-money' destination that has both cost advantage and quality that matches the expectation of global multinational companies. Indian universities are producing above 3 million graduates and around 300,000 post graduates every year. Software outsourcing industry is the highest paying industry in India. So large percentage of these students choose offshore software development company as their destination. But India is not just about number of graduates. Every CEO or CIO wants maximum return on his investment and reduce the cost. So more and more companies in developed countries are sending their software development requirements to low cost software outsourcing companies in India. Although, India has not remained as the lowest cost offshore outsourcing provider, it has based itself on quality of offshore software development at right cost.

Other reasons for software outsourcing to India

Many global consulting companies and other organizations have studied factors which should be considered while choosing any software outsourcing destination. And all studies show that, there are two main criteria which should be considered while choosing any software outsourcing provider. One is local attractiveness of software outsourcing industry and second is the capability of workers. In India, software industry is the high paying industry and that itself makes it most attractive industry. While software outsourcing was started in way back 90's, it has grown and matured now to provide quality software development as per any standards. And Indian companies are very much interested in maintaining their quality. Highest numbers of CMMi Level 5 companies are in India at present. On the other hand, other countries are not matching above criteria.

China has better infrastructure then India and produces more graduates then India. So it has bigger work force and can beat India in billing rates. But it's IT industry is less attractive locally and worker capability is also low. Other hand, China is what India was before 10 year. So software development has yet not matured to meet the quality standards. Other countries like Philippines and Mexico has better English speaking manpower for software outsourcing business. But their manpower pool is small and more attracted towards call centers. Smaller countries like Singapore and Hong Kong have both, locally attractive software industry and capability of workers. But they have very small manpower.

Advantage India has achieved in software outsourcing is not overnight. Offshore Outsourcing has grown and matured with time. In 90's, companies like GE, Citibank and British Airways started outsourcing to India and till then it has gone through many phases to compete with the best. After Initial phase, companies like Nortel and Lucent started to outsource product development to speed it up and market faster. During this time, Indian majors like Wipro and Infosys also started. In the second phase Y2K bug gave lot of work to Indian companies and gave them enough finance to grow. And with that, they started in service provider section as well as in enterprise application development. Next wave was of BPO Industry which is till going on and supply is not meeting the demand. And along with these, software outsourcing is increasing continuously. According to McKinsey, software outsourcing will increase 30-40% every year for next five years. According to Forrester research, around 3.3 million white collar jobs will be outsourced by 2015. And according to Deloitte research, two million financial sector jobs will be outsourced by 2009. And major chunk of this software outsourcing and other jobs are coming to India. According to Paul Saffo, as told to business week magazine, "Indians have a reputation of being a brilliant educated class and now they are taking a lead in colonizing cyberspace."
Wednesday, June 22, 2005

Offshore outsourcing in Europe

Now global slowdown has gone from the screens of Indian offshore outsourcing companies . The days are back where supply is unable to meet the demands and margins are getting better and better. Again time is back, where offshore outsourcing companies are not able to hire enough despite the high bench strength. High margin in business is justifying bench strength which can be deployed on demand.

Change in the global scenario

Negative effect of weaker American economy on the wake of 9/11 terrorist attack is now diminished. Companies are putting new plans for their technology improvement or buying. But majority companies are going for cost cutting where offshore outsourcing becomes a very attractive option for them. Because of higher competition, companies are now being forced to look at offshore software development centers as a strategic step. Now, when price market has gone down, Indian software outsourcing companies are becoming very attractive with their cost effective outsourcing solutions for US customers. But scenario in Europe is different then this. Majority of India’s software export is to US and majority of 'outsourcing to India' companies are looking at US, Europe accounts for a very small percentage of software export.

Why offshore outsourcing in Europe doesn’t have significant presence like in US?

Popular perception is that, in Europe, Indian companies are facing language problem in offshore outsourcing. But it is not the fact. Language is not the big problem. But the fascination of US market where it is relatively easy to get project and do body shopping business to make quick money has made Indian outsourcing companies to concentrate more on US market. Unlike Europe, in US it is easy to do body shopping or even subcontracting software project development, application development or web development. Once project is got, company tries to close it as soon as possible and hunt for another project.

However, market in Europe is totally different then US for offshore outsourcing companies. Companies in Europe look for longer term fruitful relationship. While Indian companies go with a look of 'body shopper'. Which don’t suit European market. Indian outsourcing companies have to show customer what they offer more to them can compare to customer's current supplier and then wait for customer to understand his benefits. Because of this, Indian offshore outsourcing companies need to change their attitude. European software market is of $3 trillion and Indian companies have very small stack in it. To get a foot in European market, Indian companies require providing high quality delivery in time and within budget. Along with that, they need to have a strong sales force who understand European culture and European market and can take benefit in offshore outsourcing.

Is offshore outsourcing vital for businesses?

Offshore outsourcing has become an essential part of business strategy for companies who want to remain competitive in this age of globalization. American companies started outsourcing first before European companies. That’s why they have an edge compare to their counterparts. Before few years, textile mills in New England shifted their production to southern states to take advantage of low wages. And one famous shirt maker went as far as south as Caribbean island. Now, with the rise of Indian offshore outsourcing companies, American companies have to outsource to remain competitive. However, for European countries, Poland, Hungary, Romania etc. are more attractive offshore outsourcing destinations. Like siemens has shifted 2000 jobs to Hungary before some time. But companies like Spain, Italy and Portugal are facing language problem when it comes to software outsourcing. So some are now exploring possibility of outsourcing to Latin American countries like Brazil and Mexico.
Tuesday, June 21, 2005

Indian software outsourcing companies battle to retain staff

Problems faced by software outsourcing companies

Software Outsourcing Indian companies are facing growing challenge of maintaining the employees, although they hire tens of thousands every year. Many software development companies in India are seeing half of their software programming staff getting replaced in a year. Almost all companies are facing this as their major problem. For software outsourcing Indian companies, staff costs over 50% of the total cost and this high attrition rate is leading to higher rise in employee salaries.

Damage because of staff attrition in software outsourcing

But real damage is not just the cost of lost staff but lost business for companies because when key employees leave, they take knowledge with them of existing development. Because of that, it becomes difficult to complete project intimae and in budget. Which can also lead to loss of business? Because of this, demand of quality programmers for offshore software development is outstripping supply.

Solution for software outsourcing companies

Many software outsourcing companies are providing free transport, subsidized meals, housing and entertaining environment to their employees. But this is not proving to be enough. This high attrition rate is proving to be obstacle and limiting growth of many companies. Because pool of good software programmers is very limited. Because of this, many companies around Bangalore, Bombay or Delhi are trying to fan out to other cities where expectations are lower because of less opportunities.
Monday, June 20, 2005

Software outsourcing and its future

A report by research and consulting firm Forrester Research mentions that, jobs which are lost in 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 the rate of 4 to 5% every year. These jobs which require stronger domain knowledge and knowledge of internal working of IT systems and business process are difficult to software outsource.

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 the 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

Report also mention that, attraction of cost saving in software outsourcing is yet very high and because of that, increase in jobs like software programmer will be very minimal. Also, because of very low increase in software programming jobs, salary rise will also hardly 1% in next few years. Salary of computer operators and database administrators will also grow at barely 1% rate. On the other hand, report also mentions about jobs which will have highest salary rise. Salaries of computer research scientists and information system managers will have 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

Report concludes with note that software outsourcing which has major costs saving today will decrease by 2008. Because in US salary rise will be very less. While in India and other offshore software development destination, because of lack of availability of resources, salary rise will be very high. This will decrease the difference between salary of Indian and US software engineer and eventually decrease costs saving. So many companies will prefer in-house resources rather then software outsourcing.
Monday, June 20, 2005

Software outsourcing

Why software outsource

Software outsourcing is at present booming and 80% of the fortune 500 companies are looking for software outsource. Majority of this outsourcing chunk comes to India as it is the preferred destination. Indian software outsourcing service providers are offering low cost high quality service in time and within budget which just not prove to be cost effective but it also helps in improving quality and productivity. As a company when you are going to outsource, you may consider what about your investment in infrastructure, trained IT staff, knowledgebase etc. Also, when you try to get feeling of software outsourcing by doing just small project outsourcing, you may not get cost benefit. Actual cost advantage a company gets over a long period which comes to be 35 to 60%. To achieve higher advantage, companies require a long term very positive relationship and understanding with software outsourcing company.

Why Software outsourcing to India

India is the destination where majority of companies looking for software outsourcing are heading for. More then half of the SEI-CMM Level 5 companies are Indian. That number itself speaks to quality conscious software outsourcing industry in India. India is producing nearly 3 million graduates every year and many of the institutes like IIT are world famous for producing best brains of industry. That’s why in software outsourcing to India , Indian companies are able to provide world class solutions in ecommerce, system maintenance, system reengineering, business process re-engineering, internet and intranet development, client server application, embedded programming, web designing, component based software development etc.

Steps by government of India to promote software outsourcing companies

There are many other reasons why software outsourcing to India is more preferred then other destinations. Indian government is providing more facilities and tax benefits to the software outsourcing companies. India has very good infrastructure and it is getting improved year after year. The IT Act 2000, which was passed by parliament of India has brought ecommerce within the decree of law and punishments are there for cyber crime. Government is also keeping software outsourcing industry in its top five priorities. Because of this, government is taking steps to support software outsourcing industry. It has approved 108 point action plan to promote IT in the country. This 108 point action plan was submitted by Nation Task fore to promote IT. Also, a separate ministry of Information technology is setup for faster approval and implementation of IT projects, single window clearance etc.

Other reasons making India favorable

India is worlds biggest democracy and since independence in 1947, India is a democratic country. Democracy has given India, a stable government. Indian economy is growing at the rate of 8% at present. And Indian service sectors are contributing 51% of the total GDP of India. And in that, software outsourcing industry is growing at the rate of 40%. India is increasing its infrastructure privatization. Many western companies are investing in infrastructure here. These all makes India favorable for software outsourcing.
Friday, June 17, 2005

Domestic software outsourcing

Most of the Software outsourcing  companies in India are concentrating on US and European market for offshore software outsourcing. But now trend is turning towards small to medium companies of domestic market. Nasscom  estimates that domestic software and services market is of above 15,000 crore and growing. Trend suggests that, major Indian software outsourcing companies were till now looking at big companies only but now, they have started to look at small to medium scale businesses also. India has above 3.5 million small and mid scale companies which are increasing IT deployment in their organizations. Competition in their respective business and cost puts pressure on small to mid companies to focus on their core business and take help of software outsourcing company to do non critical IT application development work. Biggest outsourcer is financial industry which is spending thousands of crores on IT requirements. IT Outsourcing companies manage IT requirements for these companies and also give strategic suggestions about how to use IT for the benefits of the business. This includes services from hardware maintenance to software installation and purchasing of new packages as well as doing software outsourcing development. But yet industry is not reacting to domestic market fast because, profit from domestic market is much lesser then profit from offshore software development business.
TatavaSoft provides software outsourcing and offshore software development services - IT Outsourcing services. Please visit Domestic software outsourcing company to know more about us.
Friday, June 17, 2005

Software outsourcing and product development

India's software outsourcing  sector is booming and increasing very fast. Banglore is now world famous as a offshore software hub. Same way, Indian BPO market is also booming. Many other IT enable outsourcing services like account outsourcing and payroll outsourcing, But now, according to latest trend, product development outsourcing is increasing in India. There are many small to medium size companies who are outsourcing parts or full product development to Indian counterparts.

So far, this trend was not much encouragable in software outsourcing. Only big companies like Adobe, Microsoft and Cisco were doing product development in India and that too inside their development center. But now many Indian companies have started product development and started entering into software outsourcing product development. It is considered that, increase in business will be around 100% in offshore outsourcing product development.

Product development requires specialised skills which not every software outsourcing company has. Product selling firms in US and Europe can reduce their software development cost by doing offshore outsourcing. On the other hand, they can concentrate on marketing and new ideas. Also, they may have to maintain people with specialised skills if they want to do on their own. If they want to open their own small development center in India, it can not be very useful. By aligning with Indian software outsourcing company, they can get access to wider skill area.

For Indian software outsourcing companies, product development is very lucriative market. Because, comapnies can charge much higer billing rate compare to software outsourcing services. On the other hand, it is also costlier to find and maintain quality software engineers.

TatvaSoft - Software outsourcing and offshore software development company with skills in Microsoft .NET technologies.
Thursday, June 16, 2005

Software outsourcing

At present software outsourcing to India is booming and all companies are having enough orders. But future may not be as rosy as it looks to be. In US and Europe so many companies are looking to start offshore outsourcing. But this booming industry is not free from dissatisfied customers. According to Gartner, one out of every four outsourcing deal is failing and ending with termination of order.

According to diamondcluster's 2005 global IT Outsourcing report, number of customers terminating software outsourcing deal prematurely has doubled to 51% - a drastic increase. While, number of customers satisfied with their offshore outsourcing has decreased to 62% from 79%. According to Tom Weakland, blame is not totally on the shoulders of software outsourcing service providers. But it also lies on the customers. Many companies are using offshore outsourcing since last few years. But yet they don't have effective measure to gauge success of offshore outsourcing deal. This outsourcing study included 210 customers and 242 software outsourcing service providers. All participants where from global 1000 companies and were of senior executive level. Research was conducted in the end of 2004 and in the beginning of 2005. IT budget of the companies which were involved ranged from less then 5 million dollars to more then 500 million dollars. The survey also points in the direction that, around three fourth of software outsourcing companies are expecting growth in offshore IT outsourcing.

However, survey reflected on few core issues also. Like, 7% of the customers mentioned that, they will decrease onshore outsourcing. While 5% customers mentioned that they will decrease offshore outsourcing. Other key factors found in the survey are, employee backlash has continued to be a major concern for customers along with worries over US anti-outsourcing legislation and political pressure.

For Indian software outsourcing companies, bad news in report was alarming interest in China. 40% of the customers mentioned that, they are expecting to outsource some part of their IT business to China in next three to five years. This was just 8% a year ago. For software outsourcing, reallocation of internal resources to more critical functions was considered biggest benefit of offshore outsourcing. While cost saving was next to it. This shows that, companies are finding very high cost-savings as very difficult to achieve. And they are understanding more about loss of good people and value of their institutional knowledge.

Report also mentions the rise of china in offshore software outsourcing market. It mentions that, china is looking like India was looking 10 years back. When software outsourcing capabilities of china will take off, it will put very high pressure on the traditional providers of offshore outsourcing services and it will set a new competitive price. Some CEOs and senior management people of software outsourcing companies were not agreeing with the report mentioning that, buyer dissatisfaction and premature cancellation are away from reality. Now a days, buyer confidence in software outsourcing and offshore software development is increasing and so is the repeat orders from customers. However, they also mention that, threat from China can not be overlooked, but it is not going to be there in nearby future.

TatvaSoft - Your reliable partner for software outsourcing and offshore outsourcing business.
Thursday, June 16, 2005

Dedicated offshore software development center

Many companies have opened dedicated offshore software development center - ODC in India. Instead of sending work on project basis, having a dedicated offshore development center is more preferred for many companies. While sending work on project basis to India, your offshore software development company creates a team to work on your project. But when project gets over, that team gets disassembled and team members start working as a part of few different teams taking knowledge along with them. When Software application requires some changes, again offshore software development company has to assemble team which work on project and again they get disassembled. And this continues. Because of change in programmers, software application also suffers and every time new team has to acquire knowledge of the existing system which is time consuming and costly. Instead of this, when software application is going to require some changes in future or requires continuous maintenance work, it is always preferable that, you make a deal with offshore software development partner to create an ODC - offshore development center where programmers work dedicatedly for your application development only. There are many benefits of ODC over traditional project based software outsourcing. It gives advantage of sustaining knowledge base which gets created while working on project and after completion also, it is retained. That indirectly benefits in increased productivity. Also, offshore software development center programmers can be treated as part of your own organization, they should be given email IDs of your company and their development place should be separate with your company name and logo. That makes them feeling part of your organization and remains more connected.

TatvaSoft - We can provide you ODC - offshore software development center to meet your requirements
Tuesday, June 14, 2005

Outsourcing deal breakup

Sears, Roebuck and Co . has terminated its 10-year, $1.6 billion IT outsourcing deal with Computer Sciences Corp. Deal was terminated in less than a year into the agreement. In a Securities and Exchange Commission filing, Sears said it had cause to pull out of the contract, citing CSC's "failure to perform certain of its obligations." But company is now facing arbitration on the dispute over the grounds of cancellation and what fee sears has to pay to CSC for the termination. The amount at stake is 96 million dollars termination fees. According to CSC, Sears has to pay that fee to terminate the contract.

Sears' filing in SEC on 13th May also revealed that CSC sought a federal court injunction that would have prevented Sears from ending the contract but court has denied the request. According to CSC in its motion filed with court, sears terminated contract "for convenience due to change of control". This was because of the sear's merger with Kmart Holding Corp. The merger has created new parent holding company Sears Holding Corp. in November. Sears and CSC made an agreement in June 2004 according to which CSC was to provide Sears with a range of IT services, including support for desktops, servers, and telecommunications systems.
Tuesday, June 14, 2005

Hidden cost in offshore outsourcing

Shifting work to offshore software development center can be much more expensive then one can even think of and in his article, Stephanie over by explains many reasons for Why offshore outsourcing has many hidden cost. Shifting work from $100 per hour person to $20 per hour person looks very attractive and many companies are shifting their work but it has some hidden cost like
  • The Cost of Selecting a Vendor - expect 1 to 10% cost on vendor selection and travelling
  • The Cost of Transition - expect 2- 3% on transition cost.
  • The Cost of Layoffs - Expect to pay an extra 3 percent to 5 percent on layoffs and related costs.
  • The Cultural Cost - Expect to spend an extra 3 percent to 27 percent on productivity lags.
  • The Cost of Ramping Up - Expect to spend an extra 1 percent to 10 percent on improving software development processes.
  • The Cost of Managing an Offshore Contract - Expect to pay an additional 6 percent to 10 percent on managing your offshore contract.
Read full article at
80% CIOs are considering Offshore outsourcing and Offshore outsourcing is irreversible megatrend according to gartner and by 2004, eight out of 10 CIOs will get direct marching orders to move offshore atleast part of their technology services. Cost saving of outsourcing can go as high as 40% but also, it is not just the only reason for outsourcing as it is now considered a tool to achieve longer term strategic goals to increase IT staff flexibility and gain access to bas of world class IT skills, so they can quickly respond to business opportunities. "I can't think of a single meeting I've had with a client in the last year without offshore being a topic," says Bob Pryor, who heads the global outsourcing practice at Cap Gemini Ernst & Young. Read full article at,10801,84861,00.html

TatvaSoft - An offshore outsourcing company trusted by many clients
Monday, June 13, 2005

IT Outsourcing labor shortage

Leaders from India's growing software outsourcing and IT enabled outsourcing services mentioned on thursday that, Indian university graduates lack the skills needed for estimated around 1 million jobs in next 4 year. According to Mr. Rajeeva Ratna Shah, an official of the federal planning commission, this problem is not with the quantity. But it is with the quality of talent. Federal planning comission directs India's economic strategy. Above was mentioned at outsourcing conference in Banglore, famous for India's hightech IT outsourcing services. He also mentioned only a fraction of 3 million graduate produced each year are ready to be employed in IT outsourcing industry. Others require several months training.

Mr. Kiran Karnik mentioned, most people who apply for back-office job lack communication skill, knowledge of international practice and advanced computing skill. He said, in interviews companies are able to select only 8 or 9 out of 100 who apply for the job. He added, the issues are so crucial that the industry will develop its own systems to test the skill of the country's university graduate.

Software outsourcing and offshore software development company TatvaSoft
Friday, June 10, 2005

Offshore outsourcing by TDC

Tele Denmark A/S is the principal provider of domestic and international telephone services in Denmark. Every year, TDC invests billions of kroners in telecoms infrastructure. Since last 18 months, TDS was working hard to get rid of IT projects which were not strategically necessary to keep within. Also, since 2003, TDC services is lowering number of employees and now current number is 600 - less then half of the total headcount before 2003. With this reduction, TDC will do software outsourcing for majority of IT development work to India. This step will reduce more than 100 million dkr in next three years. TDC is going to announce partnership with a company which will have 100 Indian software programmers working for TDC as a deal of offshore outsourcing. This will reduce development cost around 3- to 50%.

Software outsourcing and offshore outsourcing company for .NET development - TatvaSoft
Thursday, June 09, 2005

Software outsourcing to India

India has quickly became the benchmark for offshore software development center. Every year, national association of software service companies (Nasscom) hosts a conference in UK. Motive of this conference is to bring more UK organizations to outsource their software development and IT enabled service business to India - outsourcing to India.

There are many British companies like British Telecom and banks like HSBC and Standard Charted who heavily rely on outsourcing to India. This outsourcing to India saves above 50% of the cost according to many analysts. Analyst also predicts that, soon one Indian IT company will be among the top five technology companies in the world.

Currently outsourcing to India is $10 billion and out of that, 2 billion businesses is from Europe. This is growing at the rate of 30% and according to Mr. Karnik, president of Nasscom, by 2008 , Indian export earning will be $50 billion and total revenue will jump to 87 billion dollars. IT outsourcing and software industry is accounting for 25% of all exports for India and massive 8% of the total GDP. But it is employing just 0.25% of the total population only. With this massive demand in software outsourcing to India, India is providing 500,000 new IT and engineering graduates every year to meet the demand.

Many other countries have entered in the software outsourcing bandwagon like china, Russia and eastern European countries. But India is far ahead in this race. China has chance of developing a competitive offering but it will take few years.

TatvaSoft - your one stop for outsourcing to India
Wednesday, June 08, 2005

Outsourcing to India

Tuesday's summit on information technology enabled services and BPO strategy in Hyderabad concluded with much analysis. One analysis related to outsourcing to India released mentioned that companies are able to generate higher cash flow because of lesser investment in telecom, instruments and physical infrastructure. Wage arbitrage has also led to increased cost savings. Outsourcing to India related to offshore software development and software outsourcing along with BPO is helping customers to achieve 40 to 50 percentage of cost saving. More and more companies are outsourcing because they want to remain competitive and want to concentrate more on their core business. This can be achieved by outsourcing to India. Offshore software development and BPO helps companies to free up their resources and their higher management can concentrate on the core business of the company. According to Nasscom-McKinsey report, two parameters will differentiate successful business companies in ITES & BPO business - Level of intellectual property a company has and range of services a company can offer. Currently because of rapid growth of outsourcing to India, there is a wide gap between demand and supply. This has contributed to higher attrition rate which is around 25-40%. According to analysis, IT enabled services in India has generated 150,000 jobs in the year of 2004-05 and is going to generate more in the next year.
Outsourcing to India - Tatvasoft, A software development company
Tuesday, June 07, 2005

Are you ready for software outsourcing?

In the beginning, software outsourcing was used just to cut cost and concentrate on core business. There was very little room for innovation and change. But in years, software outsourcing services has matured and changed a lot. Managing proper relationship between suppliers is instrumental in realizing the benefits of software outsourcing. The new approach taken by many companies is that, outsourcing should be ongoing and integral part of the organization. Its benefits are higher service levels, reduced time to market, improved operation performance, increased IT staff retention and reduction of risk. There are few points which should be considered for new collaborative approach. This approach changes software outsourcing business from traditional buyer and seller agreement to one of co-operation and a shared vision of what one can achieve together. It also suggests constant improvement with focus on most beneficial parts of business.

This approach also expects high level of cooperation and engagement between buyer and supplier at all levels in software outsourcing. For this, clear and measurable objectives should be set. Buyer and seller in software outsourcing agreement should align their IT objectives and business goals with common focus on meaningful business. One should not do micro management and micro objective settings and one should not expect overnight results in software outsourcing. Nothing remains same in this world. And so is the case in software development life cycle. One should expect change and should be ready to accommodate business changes, technology changes and operation improvement. To create win-win situation in outsourcing software development, one should acknowledge and welcome the mutual dependency and should ensure that, objectives are aligned together. Same depends on culture. A win-win situation should be created with shared vision and approach to working together with like minded people who all shares same goals.

For any software outsourcing requirements, contact Tatvasoft - Reliable software outsourcing partner.
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.

TatvaSoft - your reliable offshore outsourcing partner
Saturday, June 04, 2005

software outsourcing to India

India has emphasized, they will want a new world trade pact which will prevent US and european countries to ban offshore software outsourcing jobs. Many different proposals in US congress in recent years have sent alarm bells in New Delhi. And to prevent this to become a law, India expects US to lock in current legislations which allow companies to move their work offshore as a part of new world trade agreement. This was mentioned by Minister of Commerce, Mr. Kamal Nath.

Mr. Nath also mentioned, "We are very concerned with the U.S. binding the current situation because all these noises just keep coming," in speech to the US-India business council. India is rapidly growing its software industry and it is a vital part of GDP. Banglore and other IT developed countries like hydrabad have became widely known in software outsourcing and other IT related services. Indian offshore service business is employing 900,000 people and it is considered that, it will double jobs by 2008. According to Mr. Nath, concerns about outsourcing are more related to emotions rather then economy. He mentioned that, US companies can lower their cost by tapping India's plentiful well educated work force.

India is also looking at short term one year visit by their professionals. This issue is very sensitive as many US law makers view it as back door immigration channel and are opposing it strongly. There are many programmers working in US with business visa under software outsourcing deal.
Software outsourcing India - Tatvasoft
Friday, June 03, 2005

Rush for Outsourcing to India

According to estimation of Nasscom, over 660 multinational companies are coming yearly to India. And each company brings business of over 1 million dollar. Biggest reason for this attraction is cost. India has cheap labor. While, in US and other developed countries, rates vary from 55$ to 65$ per hour, in India, it ranges widely from $5 per hour to $26 per hour.

Offshoring is not just limited to software development but it ranges widely from software development, maintanance to other IT enabled services like call center and backoffice work. Nasscom  expected indian revenue to be around 17 billion US $ but it crossed expectation to 22 billion $. It is because 400 out of top 500 fortune companies have their own centers in India or they are outsourcing to Indian technology firms. It is expected that, this growth will continue and Indian export will reach $ 48 billion by the end of year 2008 whcih will be 51% of total outsourcing business. By the end fiscal year 2004-05, Indian outsourcing industry employed 1.05 million people and giving indirect employement to 2.5 million people.
India Software Development - Tatvasoft
Thursday, June 02, 2005

Cultural difference in offshore outsourcing

There is a big cultural difference in offshore outsourcing. American programmers have higher comfort level with speaking up and offering suggestions. A good software developer can say, what you have been asking did not make sense. While on the other hand, indian programmer will mention, though it dont make sense, it is what client wants. Thus it may happen that, work takes more time then you anticipate. Also, common scenarios in US like creating an automation system for customer credit card or using hand held pam device for any application is very common for US programmer while it can be a foreign concept in India. Also, majority of indian IT companies are very young. Their average age is below 27 years.

So all factors affect aruond 20% of work decline in the efficiency of application development. However, this gap gets smaller and smaller as people work together. So in initial phase, cost of software development can be higher but it decreases eventually. Also, there can be other factors like high turnover of offshore programmers. Attrition rate is very high around 35% because of many multinational companies opening their offices in India and offering salary higher then what a programmer is getting. So it is always good to address this issue in contract while dealing with offshore provider.

Last problem is communication and ascent. Offshore software programmers dont interpret issues as easily as in US. Also ascent makes problem. General communication takes place by phone line but in smaller companies often it takes place on messengers, skype or IP phone.

Offshore outsourcing at Tatvasoft - Your one stop solution.
Thursday, June 02, 2005

IT service growth in India

According to National association of software and services companies (Nasscom), India's export revenues from software outsourcing has exceeded its target and will reach 17.3 billion dollars in the financial year 2004-05. In the financial year 2003-04, Indian software export was 12.8 billion dollar. Indian IT industry employs 7,70,000 people and it will continue to rise as the preferred destination of offshoring. Countries like china, russia, phillipines and eastern european countries are competing but india will remain preferred destination because of many reasons. Country like china has around 800 software companies out of which, only five has over 2000 employees. While on the other hand, India has just below 3000 software development companies and has over 15 IT companies with more then 2000 employees. It will take few years for china to pose any threat to th leadership of its continental rival India in the field of software development.
Wednesday, June 01, 2005

Offshore outsourcing services

Good time ahead for Indian offshore service providers
Top three Indian companies have announced their results which show significant financial growth and no sign of slowing down of offshore business. Outsourcing giant Wipro  announced 15.83 billion rupees profit for the financial year 2004-05 which was an increase of 58% compare to last year. TATA Consultancy services announced profit of 22.56 billion rupees. While Infosys has announced $419m profit for the end of financial year 2004-05.

Trends and analysis shows that, offshoring will continue to rise. According to Gartner, currently only 3% of the global information technology services is outsourced to countries like India and china. By 2008, only 7% will be shifted to these cheap labour countries. While some other companies like NeoIT have very optimistic view that, offshoring will grow significantly and by the end of 2005, 80% of global 2000 companies will have offshoring presence.

Offshore outsourcing - Tatvasoft