Offshore software development companies make it big by acquiring overseas clients, providing them cost effective software development solutions and helping them build a robust software application using low cost skilled resources. However, the trend is changing and many offshore software development companies face a challenging environment amid growing competition, inflation and the emergence of cloud services which facilitates organization with pay as you go model, thus saving a lot of bucks which would otherwise had turned into a massive investment in building on-premise infrastructure. In this article we will see factors that are changing offshore software development landscape.
Software Development companies have sprung up across countries like India, China, Argentina, Romania and Philippines. These offshore companies aim to tap niche market and have a strong foothold in the U.S market which is supposedly the largest market for IT outsourcing projects. Besides, developing countries like Ukraine, Ireland and Indonesia have set out for their flight for offshore software market supremacy. Due to this competition offshore software service providers find it hard to sustain their growth rate.
Low cost Delivery model is the backbone and probably the foundation of the offshore software development concept. Today many developing countries are finding it hard to cope with Dollar or Euro fluctuating exchange rates fueled by the Greek crisis and recession in the U.S Economy.
Saas (Software as a service) has been in the scene for some time now, but recently it caught attentions of enterprises as a viable option that facilitates subscription based pricing model. With changing IT landscape enterprises prefer going “Cloud” rather than invest in building in-house expensive IT infrastructure.
custom software company providers often reside in developing countries. Many of these countries have unstable Government and diverse views on IT. It directly cuts on IT policies and foreign countries are wary of doing business with any country that doesn’t have a stable IT favoring government and stringent IPR laws for sensitive data and security.
Managing On-site Staff
Software development companies run the risk of losing its employees who are working at a client’s site. These employees are often lured by high dollar green pay-scale and in the absence of contracts that forbid an employee to join any other company, offshore providers find it hard to retain or manage their skilled resources financial expectations.
These are but a few challenges that a typical offshore service provider has to face. In addition, there are many other factors that affect an offshore service provider like rising IT taxes, attrition rates and changing preferences of software on demand.