Why Outsourcing is at a Rise

The demand for the quality by the clients for their products to be developed and get the returns for the price paid by them, the software developing companies have to look towards for the specialists. The need for getting higher quality for the product is motivated by the competitors as well to stay in the market. So the companies try to get the best of the resources for themselves at a reasonable price, and in this race they are even ready to go offshore. Availability of highly skilled expertise in development of software coupled with economical labor, India has become the focus of such IT outsourcing.

This can be attributed to the following reasons:

Access the latest technology and the best talent:- Due to the rapid changes in the software industry and with the lightning advances in the field of technology, it is difficult for the companies to keep themselves up to date. Therefore to avoid the cost for upgrading and keep the costs low the companies have to look for the partners. The cost saving in this process is such high that the companies are ready to go for offshore solutions.

Reduce and control costs :- It has been the most important objective for the organizations to get high profits. The cost incurred for hiring of new staff for short-term projects is very high, particularly when there are no subsequent projects that require their services. Therefore the companies are left with the alternative to outsource.
Since the project costs are agreed upon in the beginning so there are no surprises as far as the budget of the project is concerned. Also there is no need for the outsourcing company to invest in technology, software and hardware.

Reducing the Production Time :- If an organization starts for getting a new technology and that too for a real time client project, it can not be doe overnight. Outsourcing the software development helps to get more control over the project time-scale i.e. a well-defined and planned project is delivered within the timeline.
The advancement or the up gradation can be done at the backend but not at the cost of the client project. By outsourcing the software development activities to an experienced and professional software developers, in-house work can be better managed, and day-to-day in-house issues will not affect the completion date of the project.

Improve efficiency of in-house staff allocation :- The in-house professionals can be utilized better if they are given the task of their expertise. By outsourcing of the software projects the in-house personnel can be assigned to current, critical, or ongoing projects since finding time for a new project can be difficult when the in-house resources are being used to their full potential.

Improved quality :- The outsourcing companies have a good competition among themselves and they constantly try to get keep ahead of others. Offshore outsourcing companies embrace quality standards and software life cycles that are more rigorous than those of their customers thus providing highly efficient software solutions for their clients.

India ahead in software outsourcing

SANJAY JOG
Posted online: Tuesday, April 12, 2005 at 0432 hours IST

April 11: China is unlikely to create a software outsourcing firm that can rival the Indian giants of the industry for some time to come. This is largely due to limited domestic demand, piracy and lack of skilled personnel, the International Finance Corporation, the World Bank's private sector funding arm, has said.
Despite English being a top priority in the Chinese education system, China cannot compete in language-intensive outsourcing areas with countries where English is a native language, such as India and Ireland. On the other hand, growth of Indian firms in China would clearly present a competitive challenge to Chinese outsourcers.
According to an IFC report, titled "The ICT landscape in the PRC: market trends and investment opportunities in China," released in March, given the small size of China's pure-play outsourcers today, it may take years for a company comparable to leading Indian outsourcing firms to develop. Unlike India, where large Indian firms dominate the software outsourcing market, foreign companies moving their own software development operations to China are key drivers in China's outsourcing market.
The report is crucial as the Chinese prime minister Wen Jiabao has called for cooperation and collaboration between India and China to lead the world IT market.

source:http://www.expressindia.com

Managing outsourcing process

Outsourcing the IT services is considered as a measure to cut the costs on resources including the labor, but it can be an expensive affair if not managed properly. Moreover it can lead to unmet expectations and even project failure.
A large number of industry analysts are of the view that there a very few number of projects which are problem free. Outsourcing a project is a very delicate issue and needs to be handled properly. There are a lot many things that can go wrong in the way for the project development.
If we consider the potential flaws in the process of outsourcing, we can get a lot number of things we need to consider before outsourcing. The most important thing for an IT company is to resolve the issue regarding the ownership for the source code. There is a need to check for the vendor if he will be able to adjust with the changes in the market.
Although it is risky as well as complicated but the outsourcing managers have been able to get a lot from this process as there is no sign of IT outsourcing slowing down.
Companies all over the world are able to reduce the cost, access advanced technology, compensate for a lack of skilled IT workers, improve business efficiency... and remain competitive in the global marketplace. Earlier it was assumed that outsourcing is a means to get rid of the problem as it was put on the shoulders of the vender, but this is not the case as there is a constant need for both the parties to communicate and work simultaneously on both the ends.
Another consideration that an outsourcing company should take care of is that it should not ignore the quality for the cost. The relation ship with the vender should but be one with a different party or even partner but, it should be as vendor is a part of the team.

Chinese firms polish skills in outsource competition

It is part of Lisa Pointe's role at Shanghai Wicresoft to stop her Chinese colleagues from writing "I'm deeply sorry for your inconvenience" three times in a two-paragraph e-mail to an American.
For the Chinese, she explains, apologizing repeatedly means they really feel for the other side's pain and trouble, but it can sound very insincere to Americans.
That is just one of the many lessons that Pointe, who hails from Traverse City, Mich., tries to impart in her role as an adviser at Wicresoft, a 400-employee joint venture between Microsoft and Shanghai Municipal Government.
Microsoft has outsourced part of its Web-based technical support to the concern, and Point is one of 10 people who are teaching the Chinese techies how to best provide that support for users of Microsoft products in North America.
Forget about cheap labor and factories churning out shoes and toys. Some Chinese companies now want to become known for developing software programs and providing back-office services for U.S. companies — just like their counterparts in Bangalore, India.
Simon Bell of A.T. Kearney, a Chicago management-consulting firm, thinks it will take five to 10 years before China rises as an equal to India in providing information technology and outsourcing services, at least in the English language.
But if multinational companies look for alternatives to India, he says, China often tops the list. A.T. Kearney ranks China second, after India, in its 2004 global offshore-location attractiveness index, citing the country's large, educated labor pool and cost advantage.
"Language is important, but more broadly, it is accounting skills, financial analyzing, information-technology skills (that matter)," Bell says.
To gain a foothold in the global outsourcing market, Chinese companies have to overcome many inherent difficulties. Among them: poor English skills, weak protection of intellectual-property rights and a shortage of managerial talent — not to mention a fragmented industrial structure less likely to spawn giants like India's Wipro Technologies and Tata Consultancy Services
http://seattletimes.nwsource.com