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Offshore Software Development: What is it and why do it?
Offshore development in the IT world is the term most often used to describe the business of outsourcing software programming and engineering services beyond national boundaries. The three most common justifications for offshore development are cost avoidance, internationalization and inadequate supplies of domestic resources.

Cost avoidance is the traditional reason for offshore development. Low-level tasks such as coding and software testing can be performed in less-developed countries at costs as low as ten percent of domestic ones. India has built revenues for this type of outsourcing from $110 million in 1990 to an expected $6.3 billion in 2000-2001. Attracted by such huge success, other less-developed countries are attempting to become serious contenders for India’s near monopoly.

Software manufacturers seeking international markets and needing to localize their products to specific platforms, languages and cultural requirements often find it most efficient to use offshore development resources in or near their target markets. Ireland, Australia and Finland are in the most demand for this type of outsourcing today. Cost savings from these more-developed countries remain available, but are less dramatic.

The growing shortage of IT professionals, especially in the most developed industrial countries, is rapidly becoming the most important reason for offshore development. For instance, the U.S. Department of Commerce reports that by 2003 there will be a shortfall of some 1.4 million computer programmers in the United States alone…

Russian IT wage rates are roughly the same as India’s today. And, perhaps most importantly, Russia’s educational infrastructure for producing new generations of IT professionals is among the finest in the world. There is every reason to believe that by the end of the present decade Russia will number itself among the world’s leading offshore development providers.

from "Whitepaper on Offshore Software Development in Russia",
© The American Chamber of Commerce in Russia



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