The Offshore Software Development Market trends By: John Parker

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Offshore software development is the practice being followed from several years. From then till today, there have been significant changes in the market trends for offshore software development. These can be summarized as:

1) Offshore software outsourcing of higher-end projects

Offshore software outsourcing started with labor intensive projects such as legacy software maintenance, Year 2000 bug fixes, and low-level projects in coding. Now, offshore developers are starting to work on higher-end projects such as Web applications, XML, and software design and architecture work.

2) Global software delivery using dedicated software delivery centers

When offshore software outsourcing first started, large corporations shunted off maintenance type work to companies based in low-wage countries. Now, major corporations, such as Intel, Cisco and Microsoft have opened up major software delivery centers themselves, in nations such as Russia and India to focus on work that is crucial to the future of these global companies.

3) Multisourcing

Initially, companies looked to outsource to one supplier for all of their software development requirements. Now, buyers are looking at multiple suppliers in different countries, depending on the skill set and pricing

4) Offshore outsourcing for outsourcer’s

In a completely new wave on the outsourcing trend, large offshore outsourcing vendors, particularly Indians, are subcontracting IT work to new, lower-cost software developers in China, Vietnam and other parts of Asia.

5) Increasing demand leading to high costs and low service levels

As demand for offshore outsourcing continues to increase in mature markets such as India, this will invariably put pressure on labor costs in these markets, which will lead to increasing overall costs for the outsourcers. The outsourcing service supplier, faced with increasing costs, will have to decrease service levels to control their own costs - and move their work to another offshore location.

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