Offshore But outsourcing of software development projects
Offshore outsourcing is a integral part of the globalization of the economy that has been accelerating in the more recent times. In popular imagination, globalization is commonly associated with the outsourcing of jobs abroad. At one time, it was blue-collar jobs that were outsourced, but the 1990’s and 2000’s saw the outsourcing of clerical and then professional jobs, especially in the field of information technology. The explosive growth of the economic role of IT technologies worldwide since the nineteen nineties has facilitated globalization, in the form of international outsourcing (Kamel 2003).
The advances in IT have made possible by international supply chains and patterns of outsourcing that would have been inconceivable half a century earlier. Viewed from the other end, the most important factor favoring IT outsourcing is globalization. In India and China, the cost of writing software can be as little as ten to 40 per cent of the cost of doing it in the West. Therefore, great amounts of work has been transferred there; and more would follow. Globalization and outsourcing of jobs are intimately connected with each other.
Since firms generally find it most profitable to outsource the most labor-intensive processes, the increase in outsourcing has hit non-college-educated production workers hardest. But outsourcing of software development projects to offshore organizations in India, China, Russia or other countries is one of the most important and recent manifestations of the phenomenon of globalization, that has been going on for a considerable time now. The news stories best reflect the developmental path of the global outsourcing industry and the various issues related to it.
Here we present a random assortment of a few news headlines in the past five years, in an attempt to capture a little bit of the heady, turbulent atmosphere of the real world: Dec, 2002. JP Morgan Chase on Monday announced a seven-year, $5 billion outsourcing deal with IBM. J. P. Morgan Chase says it will transfer approximately 4,000 employees and contractors, along with some resources and systems, to IBM in the first half of 2003. (Skillings 2002) Jan 2003: Big Blue inks a multibillion-dollar deal to outsource a portion of its server manufacturing to SCI-Sanmina.
(Spooner 2003a) Sep 2003: 3Com will outsource its product manufacturing and eliminate about 1000 jobs. (Spooner 2003b) Feb 2004: Under new legislation introduced by a group of Senate Democrats on Thursday, American employers would be required to warn their employees and affected communities before moving any jobs overseas. (Brownfeld 2004) Feb 2004. Expect to hear a lot more about trade — specifically, the “outsourcing” of U. S. jobs to foreign shores — in the 2004 presidential election. (Watts 2004)
March 2004. The outsourcing of prized information technology jobs overseas has created tens of thousands of new jobs in the United States, according to a recent study commissioned by the information technology industry. (CNN Money 2004) Oct 2005. India’s two largest outsourcing companies, Tata Consultancy Services and Infosys Technologies, announced healthy growth in quarterly profits on Tuesday, indicating that Western corporations continued to vigorously outsource technology and back office operations.
(New York Times, 2005) June 2006. Lego Group said it will outsource major parts of its production to an electronics manufacturing services company, Flextronics International as ‘the last major step in our process of restructuring of the group’s supply chain. (Delaine 2006) Jan 2007. India’s largest software services firm, Tata Consultancy Services, announced a strong quarter Monday, posting a 47. 3% rise in profits on increased outsourcing orders from global clients.
(David 2007) May 2007: Infosys BPO on Monday said it will launch an outsourcing firm to provide services to media and entertainment companies globally, in collaboration with TV18 Group. The proposed entity, to be called Source 18, will offer services including digital archiving and metatagging, re-purposing content, work flow charting, re-editing, transcoding, quality control as well as media process outsourcing. (PTI 2007)