Offshore custom software development

Since the 1960s and the early days of the Silicon Valley, technology pioneers developed offshoring centers in the state of Jalisco, Mexico.{{cite web|url=http://newtechmag.net/en/2018/12/10/the-new-tech-state-of-jalisco/|title=The New Tech State Of Jalisco|website=Newtechmag.net|date=10 December 2018|author=Ann Villa}} In 1996, General Electric offshored its IT for the first time when it opened its own center in India. Given the rapid growth of this sector, several companies have started to use offshore development in China, India and other countries with a lower cost per developer model. In the early 2000s, the leading countries in offshore custom software development were Russia, India, Ukraine{{Cite web|url=http://itonews.eu/ukrainian-export-of-it-outsourcing-services-rises-by-40-percent-annually/|title = Ukrainian Export of IT Outsourcing Services Rises by 40 Percent Annually | ITOnews.eu}} and China. The time difference when working with India and China for the Western world allowed work to be done round the clock adding a competitive advantage.

During the Great Recession, offshore software development spending lowered.{{cite web|url=https://www.infoworld.com/article/2627525/offshore-outsourcing-picking-up-after-recession.html|title=Offshore outsourcing picking up after recession|website=Infoworld.com|date=12 July 2010|author=John Ribeiro|access-date=12 March 2019}} During his 2008 presidential campaign, Barack Obama stated "I will stop giving tax breaks to companies that ship job overseas and I will start giving them to companies that create good jobs right here in America." This led to a $3,000 tax break for US companies per hire onshore instead of offshore.{{cite web|url=https://www.cio.com/article/2430818/politics-and-economics-of-offshore-outsourcing.html|title=Politics and Economics of Offshore Outsourcing|website=Cio.com|date=10 February 2009|author=Arpit Kraushik|access-date=13 March 2019}} In 2010, the market picked up again. In 2011, General Electric, whose CEO had a seat at the President's Council on Jobs and Competitiveness, announced the creation of 11,000 onshore IT jobs.{{cite web|url=https://www.cio.com/article/2405209/offshore-outsourcing-pioneer-ge-to-hire-1-100-american-it-workers.html|title=Offshore Outsourcing Pioneer GE to Hire 1,100 American IT Workers|website=Cio.com|date=22 August 2011|author=Stephanie Overby|access-date=20 March 2019}}

By the mid-2010s, the debate onshore/offshore was becoming irrelevant, as all major software outsourcing providers had shifted to worldwide operations and integrated offshoring into a seamless offer for their clients.

{{quote|You’ll understand why the software talent shortage is approaching a crisis. With such a global appetite for software, demand for developers far outstrips supply, especially as more companies stake their futures on digital transformation.|Marc Andreessen in The Wall Street journal, August 2011{{cite web|url=https://www.wsj.com/articles/SB10001424053111903480904576512250915629460|title=Why Software Is Eating The World|website=Wsj.com|date=20 August 2011|author=Marc Andreessen|access-date=12 March 2019}}}}

New agile and DevOps development models called for a tighter relation between the client and the offshoring provider, making major long-distance offshoring destinations (Russia, India, China) unfit for the job. Nearshoring, offshoring to a very nearby country, has gained increasing popularity among the CIO and CTO community. The USA is increasing its IT shopping in Latin American countries, and Europe in Poland and other small Eastern European countries such as Lithuania.{{cite web|url=https://www.information-age.com/outsourcing-software-development-123478078/|title=Three strategies for outsourcing software development effectively|website=Information-age.com|date=10 January 2019|author=Michael Baxter|access-date=12 March 2019}}{{cite web |author=Hunter |first=Liam |date=11 Feb 2025 |title=Why offshoring Agile development often doesn't work |url=https://codingcops.com/offshore-vs-onshore-development/ |access-date=11 Feb 2025 |website=CodingCops.com}} North Korea appeared on the map of IT offshoring destinations, having great engineering resources and an excellent price/quality ratio.{{cite web|url=https://www.pcworld.com/article/198555/the_worlds_most_unusual_outsourcing_destination.html|title=The World's Most Unusual Outsourcing Destination|website=Pcworld.com|date=10 June 2010|author=Martyn Williams|access-date=20 March 2019}}

By 2010, India started to regard China as a threatening competitor.{{cite web|url=https://www.computerweekly.com/blog/Investigating-Outsourcing/Indian-CEO-warns-of-business-threat-from-China|title=Indian CEO warns of business threat from China|website=Computerweekly.com|date=2 November 2010|author=Karl Flinders|access-date=20 March 2019}} In September 2010, the French company Capgemini bought the Brazilian software developer CPM Braxis for $330 million to significantly grow its offshore capacity.{{cite web|url=https://www.cio.com/article/2415352/outsourcing--brazil-blossoms-as-it-services-hub.html|title=Outsourcing: Brazil Blossoms as IT Services Hub|website=Cio.com|date=8 September 2010|author=Stephanie Overby|access-date=13 March 2019}} In November 2010, Hewlett-Packard confirmed a $1 billion investment to develop 6 major offshore centers in Bulgaria, China, Costa Rica, India, Malaysia and the Philippines.{{cite web|url=https://www.cio.com/article/2413570/inside-hp-s-new--1-billion-outsourcing-plan.html|title=Inside HP's New $1 Billion Outsourcing Plan|website=Cio.com|date=10 November 2010|author=Stephanie Overby|access-date=13 March 2019}}

In 2013, China's offshore software market reached $5.05 billion.{{cite web|url=http://www.chinadaily.com.cn/bizchina/chinadata/2013-08/29/content_16929629.htm|title=China offshore software market to reach $13.8b|website=Chinadaily.com|date=29 August 2013|access-date=12 March 2019}} By 2015, India was considering repatriating most of its outsourcing activities to move to a new generation of automated software development.{{cite web|url=https://economictimes.indiatimes.com/tech/ites/why-indian-it-firms-want-to-shift-outsourcing-projects-from-offshore-to-onshore-model/articleshow/47593595.cms|title=Why Indian IT firms want to shift outsourcing projects from offshore to onshore model|website=Indiatimes.com|date=9 June 2015|author=Anirban Sen|access-date=13 March 2019}} In February 2016, Apple Inc. opened its first offshore software development center in India.{{cite web|url=https://www.zdnet.com/article/apple-to-open-first-offshore-technology-development-centre-in-india/|title=Apple to open first offshore technology development centre in India|website=Zdnet.com|date=11 February 2016|author=VL Srinivasan|access-date=12 March 2019}}

In software engineering, offshore custom software development consists in offshoring the software development process in a country where production costs are lower, thus decreasing budget spending.

Offshore software development{{Cite web |date=2022-08-25 |title=What Is Offshore Software Development & Why It's Important |url=https://newwavesolution.com/blog/offshore-software-development/ |access-date=2024-10-04 |language=en-US}} means transferring a project such as a fully or partially mobile app development of your company to a third-party software development service. However, if you intend to outsource the entire workflow, you should definitely hire a software development company, not a freelancer. Even though a freelancer may be an expert in one related field or more, you need at least a team of experienced designers, QA engineers, and software developers for a project like mobile app development.

Offshore software development can include following services: product design and architecture, coding and testing; develops SaaS,{{Cite web |last=White |first=Tom |date=2021-09-15 |title=Why offshoring SaaS development in 2021 is a good idea |url=https://thescalers.com/why-offshoring-saas-development-in-2021-is-a-good-idea/ |access-date=2024-09-05 |website=The Scalers |language=en-US}} Internet/Intranet solutions, e-commerce, CRM, project management and other special web-services (including Web 2.0 solutions). Several new Web 2.0 platforms and sites are developed offshore while the entrepreneurs and management is located in Western countries such as US, UK and EU.{{Cite web |last=Messer |first=Hugo |date=2009-08-26 |title=Benefit from web 2.0: offshoring & open source |url=https://www.bridge-global.com/blog/benefit-web-20-offshoring-open-source/ |access-date=2024-09-05 |language=en-US}} The advantages mostly revolve around better cost-control over the process, which means that there is lower cash-outflow (often the biggest struggle for startups). However , the most recent technological developments to access remote connectivity throughout the world has increased the scope of small business owners to consider offshoring their business requirements . It has become very convenient to set up a remote offshoring centre in any corner of the world .{{Cite web |last=Ganatra |first=Riddhesh |date=2024-08-22 |title=What is an Offshore Development Center? How does an ODC Operate? |url=https://code-b.dev/blog/offshore-development-center |access-date=2024-09-05 |website=Code B |language=en}} This way , even a reasonably medium sized firm can hire and collaborate with the most suitable talent and save up on resources required to hire and nurture internal employees.

International consulting firms include Accenture, Capgemini, Cognizant, HCLTech, IBM Consulting, Infosys and Tata Consultancy Services.

• Software development
• Software development process
• Offshoring
• Outsourcing

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Category:Software project management

Category:Offshoring

Category:Custom software projects