Outsourcing Software Development: Foundation And Key Drivers

Outsourcing software development takes place when an outsourcing provider provides software support to another party within national borders

. We all know how IT technologies are integrated in every each and every industry, all across the sphere. In the early age of computing softwares, many corporations were inclined to have their own development team. Producing software for interdepartmental needs, this approach was known as in-house development.

Conversely, there were few companies, which did not want to understand the idea of in-house development and got inclined to buying software from specialized companies else contracting out the software developing work. Over time, in-house development started becoming out of favor. Starting from the age of big mainframes to the late 80s, the companies experienced an unprecedented growth in their developer staff. Prior to outsourcing software, this industry was not fully formed as products available lacked flexibility to be productively implemented in the diverse mainframe systems. This compelled organizations to increase their development teams, however, around late 1980s; the scale and usage of business software along with complexity of the systems grew noticeably, causing a corresponding increase of the developer staff.

Companies faced rise in expenses for infrastructures. Effective management efforts of development projects were considered excessive for businesses, especially for small to medium enterprises. Mentioned factors decreased rate of return on the investments from in-house development. By 1994 practices of software development, maintenance of IT infrastructures picked up pace. These activities took place in order to save spending and managerial efforts. Such outsourcing is now considered as a business function, where third party service provider is a subcontractor enterprise. In includes planning, management, training, maintenance or operation of software services.

The dividing line was in 1985 when Texas Instruments felt potential of outsourcing, and established their subsidiary in Bangalore, India. Since then, offshore outsourcing started to bring attention of many companies. The whole concept was driven by globalization. During the 90s, software outsourcing not immediately swapped in-house development, but also became exponentially growing industry across the globe, for instance, worth of the North American outsourcing market had value of 101 billion American dollars in 2000. Outsourcing software development compromises two natures. In first type, outsourcing contracts are between companies within same country as, vendors in same are country are geographically and culturally close, easy to contact and to deal with. Another type, which is constantly increasing its share, is so-called offshore outsourcing. In this type, an external organization is hired to perform some or all business functions in a country other than the one where the product will be sold.

Globalization that is considered key driver to offshore software development, has increased the competition among all industrial verticals is leading businesses to cut costs along with accelerated market delivery. This all can be done through use of highly qualified personnel, increasing quality of service and proximity to customer while getting access to the new markets. The outsourcing software development projects made it likely to achieve organizational goals. The rapid growth of networking has enabled a large number of small to medium companies to get the offshore solutions at minimum cost.

by: ShrivMedia

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