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Outsourcing Development Work To India Essay

2410 words - 10 pages

Outsourcing Development Work to India

I. Introduction

Globalization has had a major impact on the way business is conducted. Companies are increasingly turning to offshore software development outlets for design management. Anywhere from one-half to two-thirds of all Fortune 500 companies are already outsourcing to India and the amount of work done there for U.S. companies is expected to more than double this year according to Forrester Research. This paper will take a look at some of the arguments for and against outsourcing IT development to India. Most importantly this paper will take a look at ethical standpoints taken on outsourcing. But first, we'll take a look at the history of outsourcing to India.

II. History

In the late 1980's the rise of India outsourcing had its start. During this phase, India provided skilled contract workers for the US. Efforts to outsource projects to India arose in the late 1990's. This was driven by a combination of rapidly changing technologies and shrinking IT budgets Little by little the small offshore development projects started to multiply. In the beginning it was trial and error because there wasn't much focus on a repeatable and process driven model. During this time offshore outsourcing led to several failures. The big outsourcing force during the late 1990's came with Y2K. Work needed to get done quick and outsourcing to Indian companies was a solution to this. Indian companies had the ability to scale rapidly.

Y2K conversion wasn't too high in the value-chain job, however it gave Indian companies a view of what was possible. Then came process maturity and standardization through processes. Indian companies have spent much time honing rigorous development methodologies, and many these days are certified Level Five, the highest level of Carnegie Mellon University's Capability Maturity Model (CMM). Indian companies started evolving their Y2K outsourcing relationships into projects for software development and maintenance. This ultimately lead to the dedicated offshore center model. This is how the model evolved through the late 1980s to the 1990s to the early 21st century.

II. Pros

According to the Commerce Department "The value of US exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion from the previous year" So why is everyone jumping on the bandwagon? Some of the driving forces will be addressed below.

There are many reasons that companies provide for the determining factor for outsourcing. Some of these reasons include reducing costs, compensating for missing skill sets, improving quality, increasing productivity, avoiding tying up internal IT resources, expanding global capability, improving time to market, and allowing rapid response in resource demand. Savings from outsourcing have allowed reinvestment into onsite...

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