Offshore software development in India has evolved as software developers move up the value chain to offer custom software development. India emerged as a software service exporter in the late 1980s and early 1990s with the country's transition from centralized planning to a market-oriented economy. Today Indian companies have the lion's share in the global outsourcing market and compete with leading multinational suppliers across the IT solutions spectrum.
The Evolution of Offshore Software Development in India
Offshoring software development to India is not a new phenomenon. Beginning in the late 1980s and early 1990s when the country's economy opened up to become market oriented, Indian companies now dominate the outsourcing industry. Talented software programmers, the highest number of CMM Level 5 certified companies, several Indian IT companies listed on the NYSE and NASDAQ, a large number of Fortune 500 companies outsourcing their software needs to India are all well known facts. Now Indian developers are moving up the value chain offering more specialized services as their comfort level in dealing with global clients has grown and their extensive experience in this area has allowed them to showcase their potential.
Initially there were only certain parts of the software development process that companies were comfortable outsourcing. Paul Davies, the author of What’s This India Business, writes about the software development outsourcing evolution. One could roughly divide the development process into various stages of analysis of a need, creation of a requirements definition, relating this definition to a software specification, designing the software, writing and coding, and then implementing and testing it...
Coding was seen as a relatively easy part of the process to outsource and was not high skilled like the design phase. However, Davies writes about how Indian companies have evolved and their extensive experience in writing and supporting software has naturally led them to provide their skills in designing software. Having expanded the gamut of services they offer, Indian software providers along with creating customized software to suit specific requirements have also, through their experience, developed structured methodologies, procedures, and documentation that gives their customers a competitive advantage.
Indian software companies are constantly improving standards, ramping up their employee base, and opening development centers and sales offices abroad in anticipation of a higher demand for their constantly expanding range of services.
Concern Area
As the software sector has evolved so has the cost advantage, which is decreasing. Though software development is still carried out at a fraction of what it is in the US and several other countries, employee costs have risen considerably. This is likely to affect margins and consequently profitability.
However, there is no dearth of talent and expertise in the country and many companies are opening centers in smaller towns and cities and helping to develop the software industry in these places.
Also considering the high quality of the solutions provided as well as the success of custom software development where Indian companies design creative unique solutions, companies wanting to outsource will still find India an attractive destination.
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