Sunday, April 09, 2006

Software Outsourcing and its Future

A report by research and consulting firm Forrester Research mentions that, jobs which are lost in United States because of Software Outsourcing are primarily low salary IT jobs. These jobs are like software programming or software consultants or computer operators. But on the other hand, high end high paying jobs like system analysts, network analysts and research analysts have seen continuous and stronger growth. Jobs in this niche market are growing steadily at the rate of 4 to 5% every year. These jobs which require stronger domain knowledge and knowledge of internal working of IT systems and business process are difficult to software outsource.

Jobs for software engineers for the position of system analysis and application development implementation are also growing at the rate of 6% a year. This is because, though software outsourcing can be done to India or other offshore software development locations, customers require in-house staff for customization and maintenance of purchased software.

Why Software outsourcing will decrease ?

Report also mention that, attraction of cost saving in software outsourcing is yet very high and because of that, increase in jobs like software programmer will be very minimal. Also, because of very low increase in software programming jobs, salary rise will also hardly 1% in next few years. Salary of computer operators and database administrators will also grow at barely 1% rate. On the other hand, report also mentions about jobs which will have highest salary rise. Salaries of computer research scientists and information system managers will have highest growth which will be around 3.5% every year. While salaries of analysts and system administrators will grow at the rate of 2 to 3% every year.

Conclusion about offshore software development

Report concludes with note that software outsourcing which has major costs saving today will decrease by 2008. Because, in United States the salary rise is very-very less as compared to other countries. While in India and other offshore software development destination, because of lack of availability of resources, salary rise will be very high. This will decrease the difference between salary of Indian and US software engineer and eventually decrease costs saving. So many companies will prefer in-house resources rather then Software Outsourcing.

For details read here.