There is no alternative to offshore outsourcing
Marty McCaffrey, SOR, San Francisco, March 2001

To move IT operations and/or software development activity to external providers or, in other words, to outsource allows companies in advanced countries

• to make significant in-house savings on research, staff recruitment and training, equipment purchase, upgrades and maintenance, office space rental, etc.
• to focus more on core business.

Increasing needs in IT-specialists with certain programming skills in advanced countries cause significant challenging and expenses in outsourcing. The way out is to outsource offshore, when IT activity and/or software development such as project analysis, design, coding, testing, and maintenance are transferred to software companies in the countries with lower labor costs.

Understanding and preparing for the impact of offshore sourcing has
been characterized by Gartner as one of the CIO "must do resolutions"
(according to Ian Marriott, research director at Gartner)

Technical competence

World class IT professionals which have gained a great experience in methodologies and technology by working on a large variety of software projects, are accessed.
Cheaper, better and faster technologies top IT specialists provide are a strong motivation for outsourcing.

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Costs reduction

The number of global companies transfering work to geographies where labor can be bought much more cheaply increases rapidly.
In addition, lower cost structure of an external provider caused by specific economic situation and/or advantages of a provider's specialization, results in reducing operating costs of a company and increases its competitive advantages.

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Competitive capacity improvement

Outsourcing enables companies to increase their competitive advantages as operational functions are delivered to high professional side developers, who apply advanced technologies and offer innovative solutions.

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Reengineering

Reengineering has for an object to increase company productivity and to make company structure more efficient. Corresponding investments have to be done in such important operation factors as cost, quality, service and speed. Saving on non-core functions by outsourcing them to a top class external provider company makes required funds available.

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Focusing on core business

Operational functions of the areas that are not in company expertise are passed to outside experts. Internal people resources are freed to concentrate on main business.

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Shortage of IT-specialists with certain programming skills

There are always certain programming skills hard to find in the US or Western Europe countries. Such skills may be common in offshore regions and can be easily drained by means of outsourcing.

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Start-up time

To start up a project offshore is usually much easier and faster than in-house. Moreover, offshore companies can take projects at any stage.

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Protection

All intellectual property rights will be owned by the original company.
Financial protection is guaranteed by payment procedure, as payments are done on achievement of special milestones. In addition, it is a normal practice, when offshore companies offer fixed-price solutions on guaranteed deadlines.

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Top reasons
to outsource offshore:

• technical competence
• costs reduction
• competitive capacity improvement
• reengineering
• focusing on core business
• shortage of IT-specialists with certain programming skills
• start-up time
• protection