Friday, September 29, 2006

The Future of Software Outsourcing

Forrester Research, a research and consulting firm in its report says that, jobs that are getting lost in the United States due to Software Outsourcing are basically low salary IT jobs such as software programming or computer support specialists or computer operators. However, on the other hand, high paying jobs like system analysts, network analysts and research analysts are continuing dominating the market. In fact, jobs in this sector are growing at the steadily rate of 4 to 5% every year. Normally, these jobs require excellent domain knowledge and idea about the internal working of IT systems and business process. In software outsourcing these qualities are difficult to find.

Jobs that not get affected by software outsourcing

Higher skilled jobs such as system analysis and application development are increasing at the rate of 6% per year. That’s because, their demand is growing continuously. Also, software outsourcing can be shifted to India or other offshore software development countries, where buyers need in-house workforce to customize and upholder software.

Reasons for decrease in Software outsourcing in future

Are you the one afraid from this boom of Software Outsourcing? If yes, there is news which can lower down your fear for a great extent. According to a report, attraction of cost saving in software outsourcing is yet very high and because of that, increase in jobs like software programmer will be very less. That further results into very low increase in software programming jobs, salary rise will also hardly 1% in next few years. In fact, salary of computer operators and database administrators will also grow at the minimal rate of 1%. However, salaries of computer research scientists and information system managers will have highest growth at around 3.5% every year whereas salaries of analysts and system administrators will grow at the rate of 2 to 3% every year.

Offshore software development

It is also predicted that the market of software outsourcing which has major costs saving today will decrease by 2008. The main reason behind this will be the decreasing gap between the US salary and the outsourcing countries such as India. As, it will lower the salary in US, while in India and other offshore software development countries, because of lack of availability of resources, salary rise will be very high. It will also decrease the costs saving. Finally, companies will prefer their in-house resources rather then Offshore Software Outsourcing.

Thursday, September 28, 2006

IT Outsourcing Companies

Why Outsourcing? Why Offshore? Why Outsource? A company with various IT related needs would prefer outsource rather than than developing in-house solutions as because outsourcing provides access to talented, experience-enriched developers who can cater to the need for a complex business solution efficiently and cost effectively. While selecting an offshore company one must take into considerations various aspects especially the geographical location of the company from whom the service needs to be outsourced. Analysis has to be made on Offshore companies with or without multi-country presence. Offshore Companies With a US Office: With onsite office, a development firm has its own software engineers, analysts, and project managers who are able to respond to client needs faster and in an efficient manner as because local analysts and technical managers team up with both U.S. and offshore development centre.

At the same time, the main development being taking place in the economically feasible offshore location, the price of the total development is comfortable enough for the client saving the client a substantial amount of money. This model facilitating more financial benefits plus better and quicker service to the clients made it popular among other working models. Offshore Outsourcing Companies Without a US Office In this scenario, with geographical boundaries playing a role, communication can become a problem between the client and the Offshore company.

Communication takes place usually via email, chat or telephone. For proper analysis of the customers' requirements and needs it becomes a necessity for the offshore company executives to travel to clients site for a stipulated period of time. At most times, all requirements cannot be gathered at one visit which results in further subsequent visits resulting in increase in expenditures which definitely the client has to bear. Without any US presence, it is tough for the client company to analyze the capacity and strength in terms of managerial and technical resources of the offshore company. Reliability and security are also of high concern.

Tuesday, September 26, 2006

Outsourcing: Advantage

Offshore software development is a kind of outsourcing in which the jobs of software development are transferred to offshore countries.

Outsourcing a term having different connotations but on the other hand having significant potential to improve an organization's bottom lines. It makes the business enterprise more competitive in today's market-place by making it more responsive to changes in technology, improve quality of offerings, import new and desired skill-sets into the organization and generally however, if done with little preparation and without a clear business case, can often be a sure recipe for disaster.

Offshore software development is a kind of outsourcing in which the jobs of software development are transferred to offshore countries. Mainly companies in USA transfer software development job to India or other south Asian countries. In India there are many offshore development companies. In India offshore software development have some advantages and also some disadvantages.

Advantages of offshore software development in India

India is a densely populated country so the labor cost in India is too cheap. Along with the cheap labor Indian software professionals are so skilled and high mental level persons. This is the main reason that the US and Europe companies transfer their jobs in India. By offshoring their jobs the companies will save a lot of money. According to a market research normally US and Europe companies save around 70% of their software development cost through Offshore software development. In US the average salary of software developer is $9000 per year.

Friday, September 22, 2006


Recent trends in Software Development market show that it is no longer the most efficient way to work onshore. Competition is too high and in some particular cases, US or European IT people even go farming rather than admit the situation and adapt themselves. This article is mainly for those who are going to stay straight in the industry whatever surprises it keeps bringing.

International division of labour has done its work. So nowadays, if you ask anybody about the regions he associates with IT-industry, you’ll get quite a short list: India, China, Russia, and Eastern Europe. No wonder, historically these regions had the most efficient technically oriented education. In addition to lower cost of labour in the East, that is their main selling point, which determines their competitive strength.

As a logical sequence, almost each leading company engaged in IT sphere, whether publicly or secretly, outsources a part of its current work to third parties, often offshore. No wonder that Indian and other offshore software development companies prosper.

So what are the key factors that make companies outsource?

• Cost of labour is often several times less than onshore.
• There is no need to maintain the whole technical infrastructure.
• Company can concentrate mainly on marketing tasks.

Although that sounds good and promises several times bigger profits, incautious outsourcing can be a trap for any company. Don’t forget that you entrust your reputation to a company that is thousands miles away. Hence, if you have made a decision to outsource a part or the whole project to some company, you should take into consideration five simple tips.

Make proper research
The simplest way to find offshore Software Development companies is to try search engine or relative online directories. However, there is no guarantee that under inspirational promises any website has, you won’t find cheaters. Spend several hours and try to find the most info about the companies you have selected. Search engines should be your best friend in these efforts.

Consult alliances and associations
Almost each country where IT industry is well developed has national alliances of software development companies. These pools of developers can become your first step in search for an outsourcing company.

Communicate carefully
When you have decided to contact several, as you think, most reliable companies, you shouldn’t provide them with complete info regarding your project at once. Keep a little intrigue and give the info partially. That will make you aware about professionalism of companies’ project managers as well as about their communication policy. Communication is what you will appreciate during the whole project’s development. Therefore, it is better to find out whether they are communicative enough before you sign the contract.

Ask for references/samples
Although offshore developers cannot disclosure their recent contracts, anyway, they have several clients that can provide you with references whether they are bad or good. If there are no references at all, ask for some software the company has developed. See and try each example of their work you can. That will make you aware about the quality of their services.

Phone or visit them
The best way to test the company, which you would like to outsource to, is contact them directly. Emails are good, but you can find out more info about the possible partners if you phone them. At least you will know about their command of English (don’t forget, you are going to outsource abroad) and their real interest. Additionally, you can make them relax a little, so they will be less defended against your research of true situation. If you visit them personally you’ll see exactly who and where will work for you. At least, if the company doesn’t mind you visit them, that can mean that they are open enough for collaboration and they have provided you with more or less true info.

If you can do at least three of these five steps, there will be little chances for you to be cheated by an unreliable company thousands miles away. You’ll be able to experience that kind of wise outsourcing that can give you required competitive ability. Each time you are going to give some project for offshore development, take into account that you should be an initiator and wise decisions maker. Research, consult, and communicate. That’s the motto of any company that is successful in outsourcing. It’s not too complicated, is it?

Offshore Outsourcing Tactics

Offshore Outsourcing - or Offshoring, which is a related term but has slightly different connotations - has a significant potential to improve an organization's bottom lines, make it more responsive to changes in technology, improve quality of offerings, import new and desired skill-sets into the organization and generally make the business enterprise more competitive in today's market-place. However, if done with little preparation and without a clear business case, can often be a sure recipe for disaster. We deal with the role of strategic planning in preparing for Offshore Outsourcing in a separate article. In this article we concentrate instead on what you should do after you have decided on a clear business case for your offshore outsourcing initiative, and start short listing prospective providers.

Here we provide you some tips on how to actually go about executing your offshore outsourcing initiative so as to make it a success.

Tip #1: Define your service level requirements (SLR) in unambiguous terms. Any outsourcing house worth its salt must have an easily customizable and flexible SLR format. If they tell you they don't, then that's one of the earliest signs of trouble.

Tip #2: While defining the SLR, see how knowledgeable, responsive and helpful the contact on the provider's side is. See if she somehow adds value to the requirements generation stage by asking relevant questions.

Tip #3: Remember always to beware of a provider who promises everything that you seek can be done! That is a clear lie. As a test try making seemingly difficult or impossible or costly demands. See how the contact handles these demands. Not everything that you would 'like' to have ideally would be possible in an outsourcing scenario - at least not right away. Anyone that claims that it can, either do not know the domain well or is over-committing.

Tip #4: Visit the provider's office at least once. Meet the team that will work for you. Get familiar with them.

Tip #5: Ask the provider to provide you a named list of people that will work for you and insist on keeping the team composition unchanged. Any changes in team should be communicated to you explicitly. Put clauses into the Service Level Agreement (SLA) ensuring these. Offshore Outsourcing is all about people. So give this the same amount of attention as you would do if you employed these people yourself in your own office. At a later date when the relationship has matured to an extent, you may consciously decide to trust your provider. But, don't do that from day one. This is in your as well as the provider's interests that this due diligence about the work force should be done. This is one of the best ways to build a trusting relationship between you, your provider and the people that'll be working remotely for you.

Tip #6: You can additionally insist for quality and security certifications. However, even if the provider has all the required certifications, you MUST visit their location and check for yourself the quality management system and the security procedures that they use in practice. Meet the security chief and the quality manager and talk to them informally about their processes.

Tip #7: Insist on the provider coming up with measurable metrics about the work - both in terms of quality achieved and quantity served. Check if the metrics are such that you could double-check these on your own easily. Insist on a regular MIS reporting by the provider. The frequency of the reports will depend on various factors, but, should never be less frequent than once a month.

Tip #8: Insist on reward and penalty clauses within the SLA, based on these metrics. However, be flexible in reviewing these clauses from time to time. Remember, just as you are taking a risk outsourcing the work, the provider also is taking risks. It doesn't necessarily make you a winner if the provider's costs increase unduly while acceding to your demands.

Thursday, September 21, 2006

Offshore outsourcing boom

Offshore outsourcing company should understand try to understand how US companies are using offshore resources for outsourcing their software development.Offshore Software Development has many different views at different level of understanding. One can read different views which appear in newspapers, magazines and on internet daily. It is a very hot topic today, but it is not going to last forever. As in all business cycles, it will also attend a peak in next few years and then slowdown to reach maturity level. So it is very important for Offshore Software Development companies to take advantage of it as long as outsourcing boom is lasting. By joining the bandwagon in initial phase, companies always ensure their place in long term successful business.

Some people see offshore outsourcing as evil. Though they accept that, it must be utilized for the sake of economics and profit for share holders. It doesn't matter if its distasteful. For some others, its just a way of business. Offshore providers should remain knowledge about current trends in business. Based on that, they should adapt strategies and technology knowledge to get maximum benefit of offshore boom. Also, they can learn cultural and other sensitive issues related to outsourcing.

Wednesday, September 20, 2006

Offshore India

More and more Offshore Software Outsourcing work is going to India because India offers many more advantages. There is a lot of negative press coverage, some political oppose and scams like recently exposed by a UK based news paper. Yet, India is maintaining its edge in offshore software outsourcing. Many factors affect this advantage of India like its price, quality, economic policies of Indian government, big English speaking population.

Offshore India software development companies
To match the expectations of global multinational companies, Indian companies started implementing CMM Level 5 quality assurance procedures and today, India has highest number of CMM level 5 software development centers. Rather then providing raw low quality low cost coding, Indian companies are determined to provide quality coding at higher cost. Indian software companies are increasingly adopting the standards of US companies to provide quality.

Although, in offshore outsourcing deal, quality is not a very important factor. Once a client and service provider starts working together, and Offshore Software Outsourcing service provider starts providing good service, customer generally continue with the same vendor for longer term. Generally clients don’t leave software outsourcing service provider unless there is a huge difference in cost by other providers or something goes dramatically wrong. Offshore software development companies are now a days continuing to improve their quality process. Because, they understand the importance of achieving domain expertise and quality along with specialization rather the one stop for all service.
In India, cost of programmers is increasing rapidly. Every year 15-20% increment in salary is lot higher then programmers in US who get around 2-3% increase in salary. But an Indian programmer gets around 25% of the salary of his American counterpart. As this difference is very high, there is enough room to grow for Indian offshore software development companies. Along with the cost, Indian companies also started recruiting their managers from US and other countries. This reduces cultural difference between client and Offshore Software Outsourcing team.

Tuesday, September 19, 2006

Software outosurcing and Offshore India

Software outsourcing to India has continued to grow in last few years. This growth is driven by many factors. Cost saving is not the only factor for software outsourcing. But it is the major factor in outsourcing. There are many factors which are contributing to cost savings in India. One of the most important issues is difference in salary of a programmer in Europe or in US and a programmer in India. Indian programmer gets less then 25% of the salary of a US programmer. This is the main factor which is driving software outsourcing to India.

Offshore India

Software Outsourcing companies belong to knowledge based industry. Unlike traditional brick and mortar industry, here, it is not required to invest heavily upfront and there is no material cost in running production. So majority of the cost is the salary. It contributes anywhere to 60-80% of the total expense of any software company. So when a company hire programmers in US, cost of software development shoots up to 60-70%. That is why 'Offshroe India' is more preferred. Many companies prefer to offshore their development works to nearshore destinations like Canada instead of offshoring to India. But that offshore outsourcing generally reduce their cost saving to nearly 50%. Asian countries are considered preferred destination for offshore outsourcing. While Eastern European and Latin American countries and Canada is considered good for Nearshore operations. In future, high-end services will move to nearshore or onshore while low end services will be done at offshore and specially in India.

In India, developer doing offshore software development generally gets 15 to 25% salary rise now a day depending on his importance in projects. While in US, a programmer gets yearly 3% increment approximately. Although, salary rise in India is very high, difference between salary of Indian programmer and a programmer in US is such a wide that, cost saving will continue to be a major factor in Software Outsourcing

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Sunday, September 17, 2006

10 Biggest Concerns of a Customer While Outsourcing

While looking at Outsourcing your business processes, there are a host of issues that you need to be aware of about your prospective service provider. The key is to choose a service provider with integrity, honesty, efficiency and great communication skills. Although this seems like a formidable challenge, it’s pretty easy if you ask the right questions.
This article will give you an idea about the kind of questions you should ask your prospective service provider before Outsourcing your work.

1.How reliable is the vendor?

Ask the vendor for details such as number of years in business, number of employees, financial background and so on. Get a thorough picture of the vendor's history.

2.Does the Vendor provide quality products/services?

Vendors need to provide solid customer references as well as emphasize the processes that are followed within their organization to ensure quality products and services. Certifications such as ISO 9000 and CMM from independent agencies go a long way in providing customers with this assurance.

3.What is the Life Cycle cost of the Products/Services provided?

Cost is obviously a key reason to outsource. But while choosing a service provider, make sure you look at hidden costs from maintenance, connectivity/infrastructure, training, transition etc. instead of just the obvious costs such as licensing and consulting costs.

4.Will the vendor be able to meet delivery deadlines?

Make sure vendors promise realistic commitments taking care not to overstretch resources to a point where quality might suffer.

5.How safe is my data?

While addressing these data privacy related concerns, make sure your vendor meets your requirements in critical areas related to infrastructure security (Firewalls, Access Controls, Data Encryption, etc) as well as those that are human resource related (Pre-Recruitment checks, Non-Disclosure agreements, etc.)

6.What kind of risk am I taking on with this vendor?

Ensure that vendors provide evidence of Business Continuity/Disaster Recovery plans and risk mitigation plans. These arrangements go a long way in minimizing business risk.

7.What are the effects of the vendor’s employee attrition on me?

Ensure that vendors have cross-trained employees and have maintained sufficient buffer capacity to take care of such events.

8.Will the vendor be fair and transparent in his financial dealings with my organization?

Vendors need to be fair in matters related to invoicing especially in Time and Material type of contracts. Again, check with previous client references to ensure that the vendor is fair and transparent in his financial dealings.

9.Does the vendor comply with statutory laws and regulations?

If your vendor is not compliant with statutory laws, you stand a chance of being held responsible for violations of laws or regulations carried out by vendors. Increasing public scrutiny has ensured that customers are morally, if not legally, responsible for their vendor’s actions with respect to environmental damage, working conditions, etc. Therefore, make sure that none of the vendor's actions violate established laws.

10.Does this vendor’s culture match that of our organization?

A certain degree of ‘fit’ must exist between the two organizations in terms of work ethics and culture for smooth interaction. The best indication of this is your vendor’s initial communication with you.

Tuesday, September 12, 2006

Consultative Business Process Outsourcing (BPO)

The global business landscape has changed dramatically in the last couple of years thanks to growth of outsourcing. Outsourcing has gained strength as a management strategy for sustaining global growth as well competitive advantage to overcome the challenges of ever growing business complexities. So whether it’s a Fortune 100 transnational or even a small enterprise, everyone is looking at outsourcing as a key growth engine thanks to the increased levels of process specialization and sophistication. Domain specialization and not just economies of scale are key to the success of any outsourcing relationship. Outsourcing has been recognized to save companies and not just costs.

Evolving Outsourcing Relationships

Organizations now regard outsourcing as a key initiative for overall growth and not just as mere cost saving exercise. Hence organizations are increasingly seeking best-in-class outsourcing specialists and not just large best of breed outsourcing service providers. This is especially true in the IT & engineering verticals as organizations even outsource new product development tasks to specialized offshore vendors. Research intensive, customer focused Outsourcing relationships now have to include the following to remain competitive:

• Innovation Update. Quarterly, bi-annual, or annual innovation reviews (also known as innovation boards) focus typically on state of the market, industry trends and relevant information, technology updates, solution demonstrations, site visits, etc. Leverage other industry peer groups to understand what is happening in your industry, the outsourcing industry, and other sectors.

• Benchmarking. Clients should always activate their benchmarking clauses and focus on best practice as comparators of innovation—not just cost comparisons. Benchmark both functional excellence and outsourced environments.

• Stakeholder Satisfaction Surveys. Perform monthly, quarterly, and annual customer satisfaction surveys. They should be “360 degrees”—covering multiple dimensions and all internal and external stakeholders.

• Deliver on Partnering Promise. Hold regular collaborative planning sessions. Where people are briefed on the strategic and business objectives. Service providers need to come up with implantable strategies on how best they can meet their clients’ business challenges. This makes the outsourcing vendors to think and act above simple tactical delivery.

• Value sharing framework. A transparent value-from-outsourcing sharing mechanism on a case-by-case basis should be harnessed to pay for business services delivered. Inclusion of regular mutual rewards for both your organization and that of the service provider boosts people motivation at all levels.

• Service Excellence. All SLAs must be tied to process excellence or customer delight will not happen. Project milestones, “go-live” events, and pilots are tangible means of tracking process maturity & excellence. Other measures include customer satisfaction, productivity, Six Sigma (defects), work elimination, etc.

Outsourcing Management. The internal governance team should have a transformation or innovation owner, sufficient staff & budget to help drive innovation and must hold the provider accountable for innovation. Reassure and demonstrate to the provider that the relationship is long-term; otherwise they will be inclined to disinvest in innovation and the relationship. Your organization must retain process management expertise at a level at which you can clearly articulate future state requirements, evaluate proposals brought forward by the service provider, and work with your organization to get the business case for change.

• Executive Visibility / Support. Senior executives from the service provider side must have high visibility and access. This includes steering committees, reciprocal headquarter visits, joint speaking engagements, regularly scheduled calls, quarterly and annual briefings.

• Behavior/Communication/Culture. Be prepared to invest in and encourage business process transformations that are aligned to business goals - rather early in any outsourcing relationship. Transformation requires a partnership mindset, not a transactional orientation. Innovation is often not brought to bear because clients do not ask for it, define what they mean by it, and motivate the provider to deliver it, or put restrictions around it. Clients rarely help the provider to understand what is important to them.

Monday, September 11, 2006

SEO or PPC: Which One is Right for You?

There are two major search engine marketing strategies in use today: Search Engine Optimization and PPC (pay-per-click). Both strategies are entirely different and it is tough to decide which one or which combination is right for you.

To decide which strategy is best for you, consider the basics. It is easier to judge the pros and cons when taking the big picture into account. People will continue to battle for the top search engine positions. Search engine marketing is undoubtedly one of the best sources of targeted traffic.

As people continuously try to find new and unique ways to get additional traffic to their web sites, the Search Engine Optimization industry continues to grow. PPC refers to advertising on a search engine that charges on a per click basis whenever a visitor clicks on one of your ads. The order of ads is usually based on bidding prices, meaning that the advertiser who bids the highest price per click will be listed first. These sponsored listings are known as PPC listings.

SEO tries to change your search engine ranking by looking at a number of factors including link popularity, Page Rank and so on. If your web site is search engine optimized then obviously you are more likely to have a good ranking in the search engines. A well-optimized and marketed site will be listed in the top results whenever a person searches for related keywords. One of the best benefits of SEO marketing is you don’t have to pay for any clicks! So, how can we decide which method is better? Both methods actually serve different purposes. However, one is likely to be a better fit for your business than the other one.


PPC traffic, rankings and results tend to be more stable and predictable than Search Engine Optimization, and, combined with its low cost, this makes PPC one of the more popular ways of advertising. Most companies try PPC before they try SEO, because it’s seen as more stable. In many cases PPC lets you rank well on the search engines, without having to do the tedious work involved in SEO – no finding link partners, posting links, creating content and so on. As long as you have the budget for it, the ranking is yours. Another advantage is that the listing will get posted when you want it and not when the search engine gets around to it. With PPC’s popularity growing day by day, the market is also getting competitive. You will find that CPC’s (costs per clicks) are steadily rising, and for a common man it is getting tough to invest much. As with most auctions, the more people bidding on PPC, the higher the prices get.

The main benefit of SEO is that it does not cost per click. The disadvantages are that the traffic to your website is more unpredictable and requires a lot of work. With SEO, you have to adapt and constantly change strategies as search engines change their algorithms. Search Engine Optimization is also slower than PPC, as many search engines don't list new sites. So what should you choose? Well, it depends on how much money you are willing to spend, what your time line is, and what your return on investment is. If you have cash then PPC should be your first choice, as it produces fast results. PPC can also be used for testing the effectiveness of web sites. If you have time and money to invest in long-term results, SEO is an excellent option as well.

All and all, the best marketing strategy is typically to go with PPC in the short term to get immediate traffic and analyze conversions. SEO should then be taken with a long term view in mind, so you can reap the benefits of free traffic later on.