Sunday 17 June 2012

Major Factors Making Outsourcing of IT Application Development to India a Wise Move

Outsourcing of IT application development to India is becoming widespread among Western organizations looking for reliable service at affordable price, while local software developers and vendors now have reputation as providers of world-class service. In fact, India invested heavily in education, infrastructure, and development of software research facilities before local companies, and India's economy as a whole, have become able to benefit from development of software under contracts signed with customers based abroad. It took years, probably decades, to build the necessary infrastructure allowing for uninterrupted Internet access, to develop educational institutions capable to train well-educated software experts and those professionals to gain the first-hand experience required to take part in complex and sophisticated projects on equal terms.

At present, Asia/Pacific region is leader in the field of software outsourcing services, also called software off-shoring, while India is the world's undisputed leader in this industry, accounting for more than a third of all software outsourcing contracts. There are good reasons for foreign firms to select India as their primary choice of IT application development outsourcing, including the aforementioned presence of well-developed infrastructure, but a major fundamental factor is the lower cost of software development due mainly to lower labor costs. Actually, remunerations of India's professionals involved in development of software are going up, but at slower pace compared to wage increases in the West, while local standard of living allows for far more flexible pricing.

The gradual increase of the average remuneration for a software developer in India resulted in a recent wave of foreign-educated experts who prefer to return and pursue a career in India rather than in the West, thus boosting the number of master's degree and PhD holders involved in software development. This in turn led to a sharp increase in the number of software research and development contacts heading to India from major private and public organizations abroad.

One should not underestimate the quality of locally educated software experts, though. India have poured money into higher and tertiary education for decades, creating a well-developed network of public and private educational institutions in the field of technology. The country lacks world-leading universities and institutes but the average computer expert graduated in India can easily find a decent job abroad, which means that local software firms are able to hire well-trained personnel and provide very competitive service in terms of quality and affordability.

Another major factor in India's success story is closely related to the ongoing process of technology proliferation in an inter-connected world. Educational institutions and individual researchers are able to share knowledge instantly, while the very nature of software outsourcing results in a situation where the software developers gain knowledge and familiarize with cutting edge technologies that are otherwise difficult to access. In this mutually beneficial process, the customers benefit from lower costs of software development, while software developers and software vendors to whom such projects are outsourced gain invaluable knowledge, which further boosts their competitive advantage.

Locations like Mumbai, New Delhi, and Pune are topping the list of the world cities considered to be the best places to outsource software development, research, and consulting, while the country continues to invest in order to achieve sustainable growth of these industries, choosing to bet on knowledge-based economy. It is hard to foresee whether this will be a long-lasting process in a stagnating world economy, but India's wise investments in technologically advanced education and industries can only fuel further inflow of software outsourcing contracts from abroad. In fact, thanks to thoroughly planned long-term economic development, foreign business customers are not wondering whether outsourcing of IT application development to India is advantageous but how to choose the best fit for their respective project among numerous reputable service providers.