Is The Future Of Software Outsourcing Bright In The Post-recession Period?

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During the global economic meltdown, the software outsourcing industry bore a big brunt as people in the US started losing their jobs. And critics saw is unethical to export jobs to countries like India and China, where the labor is cheap, and give away pink slips to their countrymen. The pool of thought was not completely wrong as they were just pointing out the reality rather than creating the guilt factor among the enterprises that were practicing software outsourcing relentlessly. But now that the recession has passed the IT pundits think that it is a global responsibility for nations to come together and prevent similar disasters in the future.

As globalization is the popular trend among organizations to target a wider customer niche through the Internet, their on-site talents are not adequate. The US industries need to utilize the offshore software development resources in countries like India where five kids in ten want to grow up and be in the IT sector. Without accessing the global pool of talent these national companies cannot go the multinational way. There are three main reasons why the software outsourcing ...
... sun cannot set and the developed market corporate cannot find a suitable substitute for offshore software development:

1.Availability of the Talent :-

Celent estimates went on record that last year companies spent more than a whopping USD 350 billion on financial services for IT globally, with a contribution of USD 120 billion from North America alone. Of the total sum about a half was spent on software, internal head count, and external services of which companies in North America were accounted for USD 60 billion. More than 70% of this spending has gone to keep the lights on and other routine maintenance expenses. With the estimation of USD 250 to 300 billion for replacing and modernizing existing outdated systems the finance graph keeps going up. Moreover, the obsolete systems need to be reengineered over the next five to seven years to survive the competition by innovating and globalizing. All these years, patchwork and workarounds have been incorporated to avoid the humungous development costs. But when the global downturn knocked the doors everyone realized that they had been caught napping.

Currently, there is not a sufficient IT talent supply base in North America to take on additional programs worth $400 billion to $500 billion over the next five to seven years. Clearly without any access to an offshore talent pool all these major programs can never be initiated. Hence the only solution is to collaborate with offshore companies and get their talents for software outsourcing.

2.Complexity of the Task :-

It is not as easy as it looks in written. Corporate makeover is a serious business with cruel complexities to inhibit growth without any upsurge in development costs. Risks involved are big and should be considered and managed, including even failure. All these reasons are enough for companies to not initiate any renovation in their business systems.

Since the breaking point looms over the companies if they do not overhaul they are left with a double jeopardy - either they sink waiting or they sink trying. The latter option has a chance, even if it is not fair, to cross over the barrier into modernization. This is a tough ask and any large transformation of this cadre needs teams with local experts, business analysts, application visionaries, and solution architects who engage closely with client teams in co-creating new IT platforms.

As offshore resources do add speed, technical strength, and cost effectiveness to the development process, it is highly recommended that the companies go to the offshore consultants and vendors for collaboration. The offshore software development companies have powerful infrastructures, skill and experience to provide end-to-end solutions.

3.Cost Effectiveness :-

During recession and certainly post-recession software outsourcing has been the focus of all debates. But it has emerged as the ultimate solution to the global crisis through its cheap labor with uncompromised quality standards. Offshore software development companies have the knowledge, experience, and expertise in improving employee performance, productivity and hence generating revenues at cost effective rates. They also have a strong base of reusable software assets to help hold down the costs.

Since the overwhelming need for IT overhaul in the U.S. cannot be easily accomplished with the current U.S. IT talent supply and overarching budget constraints software outsourcing is the best way to take advantage of the many opportunities for the IT industry by embracing global collaboration. The future is bright for software outsourcing and IT industry collectively.

The author of this article is a business development associate at TatvaSoft, a software development company in India. TatvaSoft has a varied experience and strong expertise in providing all forms of software outsourcing services including offshore software development.