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In software engineering, offshore custom software development consists in offshoring the software development process in a country where production costs are lower, thus decreasing budget spending.
Since the 1960s and the early days of the Silicon Valley, technology pioneers developed offshoring centers in the state of Jalisco, Mexico. [1] In 1996, General Electric offshored its IT for the first time when it opened its own center in India. [2] Given the rapid growth of this sector, several companies have started to use offshore development in China, India and other countries with a lower cost per developer model. In the early 2000s, the leading countries in offshore custom software development were Russia, India, Ukraine [3] and China. The time difference when working with India and China for the Western world allowed work to be done round the clock adding a competitive advantage.
During the Great Recession, offshore software development spending lowered. [4] During his 2008 presidential campaign, Barack Obama stated «I will stop giving tax breaks to companies that ship job overseas and I will start giving them to companies that create good jobs right here in America.» This led to a $3,000 tax break for US companies per hire onshore instead of offshore. [5] In 2010, the market picked up again. [4] In 2011, General Electric, whose CEO had a seat at the President's Council on Jobs and Competitiveness, announced the creation of 11,000 onshore IT jobs. [2]
By the mid-2010s, the debate onshore/offshore was becoming irrelevant, as all major software outsourcing providers had shifted to worldwide operations and integrated offshoring into a seamless offer for their clients.
You’ll understand why the software talent shortage is approaching a crisis. With such a global appetite for software, demand for developers far outstrips supply, especially as more companies stake their futures on digital transformation.
New agile and DevOps development models called for a tighter relation between the client and the offshoring provider, making major long-distance offshoring destinations (Russia, India, China) unfit for the job. Nearshoring, offshoring to a very nearby country, has gained increasing popularity among the CIO and CTO community. The USA is increasing its IT shopping in Latin American countries, and Europe in Poland and other small Eastern European countries such as Lithuania. [7] [8] North Korea appeared on the map of IT offshoring destinations, having great engineering resources and an excellent price/quality ratio. [9]
By 2010, India started to regard China as a threatening competitor. [10] In September 2010, the French company Capgemini bought the Brazilian software developer CPM Braxis for $330 million to significantly grow its offshore capacity. [11] In November 2010, Hewlett-Packard confirmed a $1 billion investment to develop 6 major offshore centers in Bulgaria, China, Costa Rica, India, Malaysia and the Philippines. [12]
In 2013, China's offshore software market reached $5.05 billion. [13] By 2015, India was considering repatriating most of its outsourcing activities to move to a new generation of automated software development. [14] In February 2016, Apple Inc. opened its first offshore software development center in India. [15]
In software engineering, offshore custom software development consists in offshoring the software development process in a country where production costs are lower, thus decreasing budget spending.
Offshore software development [16] means transferring a project such as a fully or partially mobile app development of your company to a third-party software development service. However, if you intend to outsource the entire workflow, you should definitely hire a software development company, not a freelancer. Even though a freelancer may be an expert in one related field or more, you need at least a team of experienced designers, QA engineers, and software developers for a project like mobile app development.
Offshore software development can include following services: product design and architecture, coding and testing; develops SaaS, [17] Internet/Intranet solutions, e-commerce, CRM, project management and other special web-services (including Web 2.0 solutions). Several new Web 2.0 platforms and sites are developed offshore while the entrepreneurs and management is located in Western countries such as US, UK and EU. [18] The advantages mostly revolve around better cost-control over the process, which means that there is lower cash-outflow (often the biggest struggle for startups). However , the most recent technological developments to access remote connectivity throughout the world has increased the scope of small business owners to consider offshoring their business requirements . It has become very convenient to set up a remote offshoring centre in any corner of the world . [19] This way , even a reasonably medium sized firm can hire and collaborate with the most suitable talent and save up on resources required to hire and nurture internal employees.
International consulting firms include Accenture, Capgemini, Cognizant, HCLTech, IBM Consulting, Infosys and Tata Consultancy Services.
A programmer, computer programmer or coder is an author of computer source code – someone with skill in computer programming.
Outsourcing is a business practice in which companies use external providers to carry out business processes, that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to another.
Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Usually this refers to a company business, although state governments may also employ offshoring. More recently, technical and administrative services have been offshored.
Nearshoring is the outsourcing of business processes, especially information technology processes, to companies in a nearby country, often sharing a border with the target country. Both parties expect to benefit from one or more of the following dimensions of proximity: geographic, temporal, cultural, social, linguistic, economic, political, or historical linkages.
Business Process Outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a second-party service provider. Originally, this was associated with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain.
Knowledge process outsourcing (KPO) describes the outsourcing of core information-related business activities which are competitively important or form an integral part of a company's value chain. KPO requires advanced analytical and technical skills as well as a high degree of specialist expertise.
One of the most dynamic and fastest growing sectors in the Philippines is the information technology–business process outsourcing (IT-BPO) industry. The industry is composed of eight sub-sectors, namely, knowledge process outsourcing and back offices, animation, call centers, software development, game development, engineering design, and medical transcription. The IT-BPO industry plays a major role in the country's growth and development.
Business process outsourcing to India refers to the business process outsourcing services in the outsourcing industry in India, catering mainly to Western operations of multinational corporations (MNCs).
Aricent was a global design and engineering services company. It was acquired by French-based company Altran in 2018 and renamed Altran North America in April 2019 and Altran Americas in early 2020. With Altran's acquisition by Capgemini, the successors of Aricent are incorporated into Capgemini Engineering and to a lesser extent, Capgemini Invent.
Body shopping is the practice of consultancy firms recruiting workers in order to contract their services out on a tactical short- to mid-term basis. IT services companies that practice body shopping assert that they provide real services rather than the "sham" of merely farming out professionals to overseas companies.
Software Testing Outsourcing is software testing carried out by an independent company or a group of people not directly involved in the process of software development.
The information technology (I.T.) industry in India comprises information technology services and business process outsourcing. The share of the IT-BPM sector in the GDP of India is 7.4% in FY 2022. The IT and BPM industries' revenue is estimated at US$ 245 billion in FY 2023. The domestic revenue of the IT industry is estimated at $51 billion, and export revenue is estimated at $194 billion in FY 2023. The IT–BPM sector overall employs 5.4 million people as of March 2023. In December 2022, Union Minister of State for Electronics and IT Rajeev Chandrasekhar, in a written reply to a question in Rajya Sabha informed that IT units registered with state-run Software Technology Parks of India (STPI) and Special Economic Zones have exported software worth Rs 11.59 lakh crore in 2021–22.
The Offshoring Research Network is an international network of researchers and practitioners studying organizations in their transition to globalizing their business functions, processes and administrative services. The ORN conducts annual surveys tracking global sourcing strategies, drivers, concrete implementations and plans across all business functions and processes.
IGATE Corporation was an IT services company, headquartered in Bridgewater, New Jersey, United States. The firm operated in North America, Asia, Europe, Japan and Australia, providing technology consultancy and services. Its revenues in 2014 were over US$1.2 billion, and it has a workforce of over 31,000. The firm had over 70 offices and customer delivery centers in North America, Europe, Asia and Australia. On April 27, 2015 French IT services group Capgemini unveiled a deal to acquire IGATE for $4 billion.
Kanbay International, Inc. was an Indian-based global information technology (IT) services firm with approximately 6900 associates worldwide that later created a second Headquarters in the United States. Founded in 1989, the organization offered management consulting, technology integration, application development, and outsourcing strategies. Kanbay is now a division of Capgemini under the name Financial Services Strategic Business Unit (FS-SBU).
Data center services encompass all of the services and facility-related components or activities that support the implementation, maintenance, operation, and enhancement of a data center, which is an environment that provides processing, storage, networking, management and the distribution of data within an enterprise.
Chennai is the third largest software exporter in India, next only to Bangalore and Hyderabad. India's largest IT park is housed at Chennai. Software exports from Tamil Nadu during 2017–2018 rose 8.8% per cent to touch 1,11,179 crore, involving a workforce of 780,000, and the city is the hub for deep tech startup companies. Many software and software services companies have development centres in Chennai, which contributed 14 percent of India's total software exports of ₹ 14,42,140 lakh during 2006–07, making it the third largest Indian city software exporter following Bangalore, Hyderabad and the city is the home for 7 top rated IT companies out of 15 in India. The Tidel Park in Chennai was billed as Asia's largest IT park when it was built. Major software companies have their offices set up here, with some of them making Chennai their largest base. Chennai is the largest hub for e-publishing, as there are 67 e-publishing units registered with the STPI and many Rs.8300-Cr data centers, digital hubs are in the process of development. A major reason for the growth of the Software industry are the top engineering colleges in Tamil Nadu, of which Chennai is a major contributor, have been a major recruiting hub for the IT firms. According to estimates, these engineering colleges and universities consistently generate about 50 per cent of the human resource requirements for the IT and ITES industry was being sourced from the state, particularly from Chennai. The total employment in the Tamil Nadu’s technology sector crossed the one million mark in the quarter ended June 2022.
Robotic process automation (RPA) is a form of business process automation that is based on software robots (bots) or artificial intelligence (AI) agents. RPA should not be confused with artificial intelligence as it is based on automotive technology following a predefined workflow. It is sometimes referred to as software robotics.
The business process outsourcing industry in China including IT and other outsourcing services for onshore and export markets surpassed 1 trillion yuan in 2016 according to the Ministry of Commerce (MOC).
Outsourcing in Ukraine is a widely used service in Ukraine. Most often, outsourcing services are provided in the Information Technology (IT) sphere, but they are also popular in the areas of logistics, marketing services, recruiting, accounting, processing and systematization of information, medical services, administration, and others.