Future Of Offshore Outsourcing

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Offshore Outsourcing gives a unique possibility to hold highly qualifies overseas staff at a very low rate which is extremely attractive for many entrepreneurs. The domains of expertise which can opt for Offshoring: accounting, advertising, animation, Human Resources Management and Development, IT projects, financial investments and consultancy, legal services, and network security.

The idea of Offshore Outsourcing is more than two centuries old. It dates back to times when the colonists began to draw crude materials from their colonies and later sell it as ready made commodities. In 19th century the British and other colonists almost ruined the small and middle scale industries in India and other respective colonies by distributing higher quality ready made products to locals. As of current situation colonizers and colonies seem to have changed places. Opting for the benefit of cheap labour in underdeveloped countries, lots of multinational corporations have established affiliated branches in used-to-be colonies ans other locations (namely China, Canada, South America, Africa, Israel, Ireland, Russia). Within the past decade only US corporations invested $7 billion in their offshore branches in India saving more than $26 billion. For example, Telstra, an Australian telecommunications company, spared more than $75 million per year by delegating many of its activities offshore.

The sophisticated approach of U.S. companies to Offshore Outsourcing Industry has generated fierce disputes, which is apprehensible taking into account the current situation with jobs market within already tense economy. In the face of such desperate opposition to Offshore Outsourcing, the software development industry will take its best effort to acclimatize to these changes and allow innovations to thrive. Critics condemned offshore development as everything beginning from improvidence and to anti-American – however it may be the heaven-sent opportunity for the U.S. software industry. To remain competitive and keep up the cutting edge technology trends U.S. software development companies must long for innovations. But companies’ research and development activities are chocked by deficient budgets. Offshore development can be a universal solution. The research held by the US Chamber of Commerce, points out the main cause of increased unemployment in the US, Britain and other developed countries: it is the enhancement in productivity due to continuing advancements leading to massive unemployment.

Large software company, expends on proper product innovation much less than you might think. It takes less than 30 percent of the R&D budget. This small part of the pie is further squeezed from two directions. First, total R&D expends by public U.S. software development companies are decreasing. Actually, in 2002 they decreased by 2 percent.

And second, R&D budgets are diffused by constantly increasing support-related activities: bug-fixing, updates and upgrades. Product support agreements became required in relations with huge and corporate customers and support demands continually mount up.

Such restricted resources and finance for R&D generate lowest advance possible. Instead, plenty of brightest intellects are bogged down in enormous amounts of software support tasks. The most ironic is that most of these software engineers would be happier with, and really would better fit for, search of innovations. But companies were driven into the corner. That is where offshore development can be the way out.

In many cases, a well-managed and implemented offshore development program can help save up to 20 percent of the R&D budget for new innovation while successfully meeting all support obligations of ongoing customers.