Wednesday, June 24, 2015

A Bit of History: Outsourced Development and Offshore Development

Software development programs were kick started long before. But the concept of offshore software development was conceived only in early 1990’s. Not many companies where doing offshore software development programs at that time. Companies at that time where having their own space at their own locations. There they will hire software professionals and take all kinds of development projects. Then, who is the first one who came up with the offshore development idea? We have to dig into the history to know about the roots of Outsource Software Development projects.


Anyone remember the name Andersen consulting? In Europe and US they were the first to attempt project development outsourcing. At that time no one ever thought about doing such type of initiatives. Everyone liked to look after their business from the same place itself. But the term outsourcing was not anyone at that time. Anderson and allies were doing onshore development projects. Their method of project execution is similar to the one that was doing by offshore development companies. The company was recruiting many software professionals at that time. The hired professionals were sent to special training sessions. In that session they will be taught about the various ways in which a project has to be executed for the customers. Training on software development was given on diverse platforms. Again, there were many levels in it. They were programmers, system analysts and project managers. After giving a common training program, each level of executives will be again trained according to their post. By following this method of development practises Anderson was able to gain lot of business in the software development area.


At a time there were able to handle lot of clients. This helped them in improving the business. But the main problem with this type of project execution method was its cost. They were hiring programmers and development professionals at very high prices. Or at that time the software development professionals in U.S and Europe were only a few. So there was great demand for such people. Thus it becomes not practical for smaller or low investment companies to meet the cost of software development programs. This forced many to think about alternative methods. It becomes very much impossible for companies to meet the expenses related to developing software. Later, it was towards the end of 1990’s many having started thinking about offshore development or project outsourcing.




In late 1990’s many companies have started having tie-up with companies of other countries. Certain other companies have started enquiring about software development projects and its cost directly with companies outside the country. All these efforts where started after realizing the benefits of software development outsourcing. When compare with the cost associated with developing software in the hometown with other countries, it was relatively very high. But the expertise of professionals on developing software was same. This forced companies to opt for outsourcing. Many companies in U.S and Europe have started sending project offers to other countries where production cost was lower. This includes countries like India. Earlier U.S companies where sending representatives to other countries for collecting information regarding the cost, professional expertise, man power, company set up etc. After sometime there came a change in this trend. The companies in other countries started bidding for projects and this can be called Outsource Software Development trend. The company that won the bid will take the project and submit it on time after completion. Nowadays all the major outsourcing companies are following this pattern. With the development of technology it becomes easy for offshore development companies to find projects and bid for it. The term “outsourcing” is now used in a broader sense. Not only software development, many more works have started coming from various companies to offshore development companies.  

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