Current Trends in offshore outsourcing of software development
The contracting out of a business function, mostly one that was performed in-house previously to an external provider is termed as Software development outsource. Thus there is a contractual agreement between two organizations which involves an exchange of services and payments. The concept of outsourcing thereby supports the firms to perform well in their core competencies and thus mitigating rise of skill or expertise shortage in the areas where they want to outsource. Outsourcing allows the company to focus on its core activities while external software testing experts take care of the independent validation work.
The demand for offshore outsourcing of software development (OSD) has seen a constant growth from its long term client such as the USA, countries of the EU, Australia, and Canada. In the recent years new clients comprising of the developed countries of South-Eastern Asia and Pacific region, namely Japan, South Korea and Taiwan have also come up. The U.S however dominates the scene and is likely to do the same for another decade.
Offshore outsourcing has exposed a number of problems in conducting this kind of work. The cost savings attained by employing personnel abroad come together with decreasing quality of the final product. Body-shopping causes problems with working visas and illegal immigration. Complexity in relationships with foreign companies might lead to managerial overhead. On account of these factors companies now have to determine the limits of the distance software development. Thus there is a visible increase in competition between the offshore companies and companies providing in-country or near-shore outsourcing. The examples are not limited just to Canada or some countries in the Caribbean and Mexico, but also Chinese companies outsourcing Indian, Japanese or Singapore firms. The nature of the competition has become more complicated and comprises of several tiers.
The first tier comprising of the most grown-up offshore firms now are not concerned with rivals in their region. They shift from OSD into management and consultancy business. The second tier firms, which are apparent in important technology centers in turn, can see their prospective competitors. In third-tier are the Chinese or Philippines companies, aggressively entering the outsourcing market.
The significant challenges in the contemporary offshore OSD are the problems that arise in coordinating distance work across time, space and culture. The obligation to satisfy constantly changing client requirements, meet quality standards requirements and time schedules transforms offshore companies into entities with sophisticated internal organizations. This process is also caused by constant increase in clients’ demands and expectations. Reduction in control costs is considered to be the most significant factor affecting the decision to start an OSD contract. Even small businesses through the software development outsource are able to get a world class quality. This is so because providers due to increased competition caused by growing globalization tend to provide high quality software development services which correspond to the international standards. Provider gets an advantage of increasing its capabilities by getting new knowledge from the client, from its practices and experiences.
About the Author
George is a article writer who writes the article about application development offshore and software development outsource etc. know more about outsourcing software companies please visit http://www.hytechpro.com/
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