Software Development India is still Excellent Location for Offshore

According to recent study on offshore software development, India is an excellent offshore location for software development and other Information Technology services.

Sudin Apte said, “The cost advantage of hiring software developer in India is likely to continue for at least another five years”. Indian big software outsourcers companies Wipro Ltd. and Satyam Computer Services Ltd. warned starting of this month that salary rising could reduce their profit margins in the running quarter.

A number of multinational software development companies like IBM Corp., Accenture Ltd., and Capgemini SA are increasing their project operations in India, and rival for staff with Indian outsourcers.

Salaries of Indian staff employed in software development services delivery are growing at 12% to 15% a year on average, estimates by Forrester of Cambridge, Massachusetts. But vendors delivering offshore services from India are introducing measures to improve productivity including creating reusable components that will make software development more efficient, and require fewer new hires.

Salaries for experienced software engineers have been growing, but the salaries for entry level staff have still about the same. According to study about 50% of India's population is under 25, and another 15% lie between the ages of 25 and 30, so in India there are a larger number of young people entering in the software industries. Software Companies that have excellent work in place can reduce costs without sacrificing quality by having a higher mix of younger staff.

According to Apte, “India's demographics consist of the large number of software engineers that graduate each year for Indian university, continue to give it an edge over other countries such as China”.

"In terms of ability to scale number of staff and everything else, I don't think any other country can offer what India can," said by Aruna Jayanthi.

The demand of outsourcing contracts across the globe is likely to be lower running year than last year, according to a study by TPI. Outsourcing has been shift from large contracts to a number of smaller contracts, according to TPI. Rather than outsource each and everything to one supplier, customers prefer to outsource one process at a time, and to different providers, Pai said. Clients are also reorganizing contracts with service providers for lower rates to take advantage of the cost savings from offshore delivery of services, he added.

Even as the value of outsourcing contracts ratio is came down, offshore delivery of services is on the rising. Around 47% of outsourcing business on which TPI is currently suggested to involve an offshore delivery component. The offshore component of the deals is about 48% of the contract value on an average, according to TPI. India still has about 70% share of the offshore delivery of services, and the business goes to both Indian outsourcers and Indian project operations of multinational services companies, Pai said.

According to Forrester, a new chance to emerging for India is offshore product development, which includes embedded software development, research and development (R&D) and development of software products. Multinational software companies are setting up their own product development operations in India or outsourcing to Indian software service providers. The revenue for India from this business has rising ten-fold from US$300 million in 2001 to over $3 billion last year.