| ore Outsourcing provides the ability to hold skilled | | | | choked through deficient R&D budgets on the |
| overseas staff at a small part of the labor cost which | | | | company side and an overspending menace on the |
| is exhilarating to several entrepreneurs. The vistas in | | | | customer side. Offshore development can help on |
| which Offshoring can be utilized especially in: | | | | both sides. In fact, as pointed out in a recent report by |
| accounting, advertising, animation, Human Resource | | | | the US Chamber of Commerce, the main cause of |
| Management and Development, health care-related | | | | increased unemployment in the US, Britain and other |
| jobs, IT projects, financial investment and consultancy, | | | | developed countries is the enhancement in productivity |
| legal services, and network security. | | | | due to continuing advancements leading to massive |
| The concept of Offshore Outsourcing is couple of | | | | unemployment; and, two, that it has not contributed to |
| centuries old when the colonial powers started taking | | | | unemployment, as is sought to be made out. |
| raw materials from their respective colonies and then | | | | Here are the reasons: |
| selling them after processing them into manufactured | | | | For a mature software company, expending on proper |
| commodities. In 19th century the Britishers (and other | | | | product innovation is much less than what you might |
| imperialist/colonial powers), because of industrial | | | | think. It by and large accounts for less than 30 percent |
| revolution, rampaged the small-scale and cottage scale | | | | of the R&D budget. This small piece of the pie is |
| industries in India (and other respective colonies) by | | | | being further clutched from two directions. First, overall |
| selling processed goods to the natives having a better | | | | R&D spending by public U.S. software companies |
| quality. Now in 21st century the tables seem to have | | | | is lessening. In fact, in 2002 it fell by 2 percent, after |
| turned on the colonizers (or neo-colonizers). Taking | | | | having consistently grown at 15 percent annually since |
| advantage of the cheap labour in developing countries, | | | | 1998. |
| many MNCs have set up subsidiaries in India and in | | | | Most of these cuts are captivating a bite out of new |
| other places (like China, Canada, South America, | | | | product development. Second, R&D budgets are |
| Africa, Israel, Ireland, Russia). In the past decade, US | | | | being consumed by ever-increasing |
| companies alone have invested $7 billion in their | | | | maintenance-related activities, such as bug-fixing, |
| subsidiaries in India, picking a net saving of more than | | | | upgrades and minor enrichments. Maintenance |
| $26 billion. Telstra, an Australian telecom company, for | | | | agreements with a huge customer base mount up |
| instance, saved more than $75 million a year by | | | | over the years mandate this support. |
| outsourcing many jobs to Indian enterprises. | | | | With such restricted resources accessible, software |
| Latest modifications in the way U.S. companies are | | | | companies can't successfully produce real advance. |
| using Offshore Outsourcing Industry have generated | | | | Instead, many of finest and brightest are jammed |
| heated controversy, which is comprehensible | | | | down in what amounts to software maintenance |
| considering that jobs are at hazard in an already tense | | | | tasks. The irony is that many of these developers |
| economy. But whereas it may be human | | | | would be happier with--and better suited for--truly |
| temperament to adhere to the status quo, the | | | | pioneering work. But companies have painted |
| software industry will be better off in acclimatizing to | | | | themselves into a corner. This is where offshore |
| these changes and allowing innovation to thrive. | | | | development can facilitate. |
| Detractors have fated offshore development as | | | | In most cases, a well-executed offshore development |
| everything from shortsighted to un-American--but it | | | | program can help release an added 20 percent of the |
| may well conclude salvaging the U.S. software | | | | R&D budget for new innovation while continuing to |
| industry. For staying competitive in the global market, | | | | meet the maintenance obligations of mature |
| U.S. software companies must persist in driving | | | | companies. |
| innovation. Nevertheless, innovation today is being | | | | |