| |
The report seeks
to shed light on the industry at a time when software companies
are getting increasingly dependant on offshoring, seeing it
as an integral part of their business strategy. It is based
on the interviews of more than 50 senior-level executives, including
CEOs, CTOs, VPs of engineering and R&D departments of top
US-based product development companies. The officials were quizzed
about their company's offshoring drivers, satisfaction levels,
challenges faced and strategy.
India's vast pool of talent, especially at management level,
the significant product experience, and the English language
capabilities are the most cited reasons for reliance on India.
China may be touted as the biggest emerging threat. However,
currently only 5% of the sofware companies surveyed are sending
work there. Sri Lanka, Canada, Vietnam, and Philippines are
other second-tier destinations.
The findings showed a significant spurt in the offshoring activity
in the last two years, with 84% of the respondents reporting
that their company is currently engaged in offshoring, and another
4% planning to move in the coming 12 months. Almost two-thirds
of software respondents termed outsourcing as |
|
a normal business
practice in the software industry.
At present, most software companies are offshoring non-core
functions, such as support and testing. With QA, feature development,
bug-testing, maintenance and test suite operations being the
most common. However, significant number of software vendors
are also sending non-core product development and high-level
strategic work offshore once considered a risky proposition.
In fact 60% of the respondents termed the practice as strategic
to their company's success.
The executives surveyed also demonstrated an increase in confidence
regarding the quality of work done by their offshore counterparts.
With almost 80 per cent of the respondents who send work offshore
saying that their company is more reliant on offshoring now
than two years back.
While cost saving continues to remain the key criterion for
most offshorers, there has been some varied additions to the
list in the past few years. Workforce flexibility, faster time-to-market
and gaining additional skills have also become
|
|
common reasons. The report suggests that
software companies need to be looking to do more than just
costs or offshoring initiatives will not succeed.
In some cases, the pickings are simply not there in developed
markets. Take the oil and gas sector, where ONGC and IOC are
spearheading investments in emerging markets, particularly
for exploration opportunities. In other sectors like manufacturing
and engineering, Indian companies have high-end and low cost
capabilities which they are eager to leverage.
Says Rattan Jindal, VC & MD of Jindal Stainless: "Indian
companies are now looking for cross-border expansions and
acquisitions to grow. Today, most Indian companies have the
right environment (a clean balance sheet, availability of
financial resources, etc) and the willingness to take on foreign
companies in their own markets."
For Indian companies in sectors like software, pharma and
auto components, the developed market push is a double win-win;
they can shore up their capabilities using the back-end in
India and acquire customers in a developed market at the same
time.
|
