Trends in the Offshore Outsource Software Development Market

 The latest trends in offshore outsourcing include the following:

- Offshore software outsourcing moves up the value chain

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

- Global software delivery via dedicated software delivery centers around the world

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.

- 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 price offered.

- Outsourcing of new services

Business Process Outsourcing (BPO) is the fastest growing worldwide outsourced market segment.  In BPO, companies not only outsource software development, but also human resources, call center, desktop support, help desk, network monitoring, finance and accounting services to low-cost destination around the world.

- Outsourcer's offshore outsourcing

In a completely new twist 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.

- Protection of Intellectual Property

Many countries, such as Russia, India and China have very little respect for intellectual property.  However, with the rise of offshore software development, these nations have come to the conclusion that if they don't protect the intellectual property of the companies paying the contracts, they will start to lose out on those contracts to other nations which do adhere to intellectual property rights. 

- Increasing demand leads to increasing costs and decreasing 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.