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Here’s Why India Continues to Be the Offshoring Leader

When the IT outsourcing phenomenon started in the 1990s, all eyes were on India. During the 2000s, improved broadband connectivity and a tendency to desire a larger share in the software pie motivated other countries in Eastern Europe, Southeast Asia and East Asia to follow suit. IT agencies and software companies quickly sprung up in Romania, Bulgaria, the Philippines, China, Vietnam and even Cambodia. Many clients often wonder if India is still the right destination to outsource their projects. Before we discuss why India might still be a good option for those who seek stability, security and results, let us take a look at some of the advantages and disadvantages that these three larger regions have over India.

Past the Iron Curtain – A European IT saga

Post-1990, many European countries emerged from the shadows of the Cold War and the Russian influence and quickly began to move toward capitalism. Romania, Bulgaria and Ukraine stood out in particular, as they are encouraging their software developers to attract more international projects.

Advantages

• Eastern European countries inherited the communist-era technical schools, which were given a lot of importance.
• Governments in Bulgaria, Romania and Ukraine have all invested in IT parks, special economic zones and encouraged both local and foreign businesses to set up offices and grow.
• Many of these countries are inexpensive, and costs could be comparable to South Asia and Southeast Asia.
• Eastern European countries have a work culture that is similar to Western Europe and North America.
• These countries are also geographically nearer to Western European countries and North America, enabling easy travel and similar time zones.

Disadvantages

• There are still communist relics in the way these countries operate.
• Bureaucracy and red tape play a major role in the way things operate in Easter Europe.
• There is also a sense of instability in countries such as Ukraine, which have seen political and military upheavals in the recent past.
• Lack of English language proficiency among citizens
• The costs can significantly increase over a period of time, especially with most of these countries becoming part of the European Union.

The IT Revolution in China and Beyond

China emerged from its own shadows during the 1990s, much like other communist countries. China invested heavily in infrastructure, training and business skills, which has helped the country to become a major IT outsourcing destination. Its neighbours like South Korea, Taiwan and the Philippines to present attractive options to software clients who are looking for proficient developers.

Advantages

• Technical education has always been a part of the culture of these countries, enabling them to quickly adapt to new technologies, especially information technology.
• China is very serious about luring business to its shores, and it actively pursues clients.
• The Philippines has a culture that is quite Americanized and the country’s citizens speak better English than most Asians.
• Taiwan and South Korea offer infrastructure comparable to the Western World.  
• China is one of the most important hardware manufacturers in the world.

Disadvantages

• Most of these countries lack good English language skills.
• China may be great at hardware, but it still needs to pick up when it comes to software skills.
• The Philippines is particularly good at customer service, but not so much when it comes to software development.
• These countries are geographically very far from Europe and North America, making communication and travel difficult.
• South Korea and Taiwan can be as expensive as countries in Europe or North America.

Past the Monasteries and Paddy Fields of Indochina

Not forgetting the tumultuous past of Southeast Asian countries, they have become important tourist destinations today. Yet, something radically different ties all these nations together: software development and IT offshoring. Vietnam, Malaysia and Cambodia in particular are investing heavily in IT offshoring, and developers in these countries have much to offer.

Advantages

• Vietnam and other countries in Indochina are very affordable when compared to other countries.
• Vietnam has invested a lot in training its developers and building infrastructure.
• Laos and Cambodia are even more affordable than Vietnam, and they also encourage businesses to move projects easily, sans the red tape.
• Indonesia and Malaysia are known for their software talent, which is steadily growing thanks to technical education. Singapore and Thailand provide state of the art business facilities and are not far away from Vietnam or other countries aforementioned.
• These countries are well connected to North America via trans-Pacific flights.

Disadvantages

• Intellectual property protection may not be very solid in these countries, except in Singapore.
• Malaysia, Singapore, Thailand and Indonesia can prove to be very expensive.
• Vietnam, Laos and Cambodia are still in the process of building infrastructure that is required to run large cloud servers.
• English language proficiency is limited to Singapore, and outsourcing is usually done to other countries in Southeast Asia.
• These countries are geographical far away from North America and Europe.

India, Still the Leader of Software Development

While a number of countries have emerged to become offshoring destinations in recent years, India continues to be the market leader in terms of the sheer number of projects completed, research and development, innovation and infrastructure. The fact that India has been in the scene right from the outset of software development makes it a venerable leader.

Advantages

• A solid economy that is built around software development and IT consultancy and still the premier destination for software development, research, consultancy and education.
• The world’s largest English-speaking country, with more number of people being able to speak English than in the USA or UK.
• A strong technical-education oriented culture, which is now increasingly more computer science-oriented.
• Legal and bureaucratic steps are clear and transparent, with intellectual properties safeguarded.
• Agencies have the experience, infrastructure, manpower and capital to manage both small and large IT products.

Disadvantages

• Sometimes, the red tape gets in the way
• Geographically and culturally distant from Europe and North America
• Not always easy to locate reputed software agencies, as there are far too many of them
• Work culture is very different from Western countries.
• Costs may not always be affordable, as Indian software companies have begun to realize they deserve better rates for their experience and infrastructure.

A few questions to ask before choosing a software vendor or a team of developers in India

• Are they knowledgeable and savvy?
• How successful have they been in previous projects?
• Did they appeal to you when you spoke to them over the phone or in-person?
• How credible are their marketing strategies and do their advertisements promise too much or too little?
• Have you spoken to their references and cleared your doubts?
• Are you being too price-conscious and not considering some of the more well-established Indian software vendors?

Despite certain setbacks, India continues to be the world leader in terms of software development

India continues to be the most important software development destination in the world, thanks to its English-speaking urban population which continues to provide a valuable base for nurturing developer talent. Most importantly, the country scores over its rivals when it comes to its infrastructure, a sheer number of projects that are completed each day, a focus on innovation and R&D, and a focus on high-level software consultancy.

Larger and older IT service companies in India may prove to be slightly more expensive than many newer software development enterprises. However, they have better infrastructure, cohesive teams, access to the latest in terms of technology and a more westernized work culture. All these factors point toward India continuing to lead the rest of the world when it comes to software development and consultancy.