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Offshore Software Development: What is it and why do it?
Offshore development in the IT world is the term most often used to describe the business of outsourcing software programming and engineering services beyond national
boundaries. The three most common justifications for offshore development are cost
avoidance, internationalization and inadequate supplies of domestic
resources.
Cost avoidance is the traditional reason for offshore development. Low-level tasks such as coding and software testing can be performed in less-developed countries at costs as low as ten percent of domestic
ones. India has built revenues for this type of outsourcing from $110 million in 1990 to an expected $6.3 billion in 2000-2001. Attracted by such huge
success, other less-developed countries are attempting to become serious contenders for India’s near
monopoly.
Software manufacturers seeking international markets and needing to localize their products to specific
platforms, languages and cultural requirements often find it most efficient to use offshore development resources in or near their target
markets. Ireland, Australia and Finland are in the most demand for this type of outsourcing
today. Cost savings from these more-developed countries remain
available, but are less dramatic.
The growing shortage of IT professionals, especially in the most developed industrial
countries, is rapidly becoming the most important reason for offshore
development. For instance, the U.S. Department of Commerce reports that by 2003 there will be a shortfall of some 1.4 million computer programmers in the United States
alone…
Russian IT wage rates are roughly the same as India’s today. And, perhaps most
importantly, Russia’s educational infrastructure for producing new generations of IT professionals is among the finest in the
world. There is every reason to believe that by the end of the present decade Russia will number itself among the world’s leading offshore development
providers.
from "Whitepaper on Offshore Software Development in
Russia",
© The American Chamber of Commerce in Russia
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