In 1993-94 when I started Gislen Software, outsourcing software development to India was still a novel strategy, and while the cost was low, there were significant challenges in those days. Most software export in those days was made by satellite link, and the Internet only became commonly available a few years later. Indian infrastructure and bureaucracy made life difficult in those days, but today these things are mostly history.
Today outsourcing is a mainstream business strategy. And this document gives an overview of the present state of outsourcing to India.
The underlying drivers have remained the same, and businesses are constantly thinking of ways to reinvent their operations with effective processes in the face of rapid market changes and constant competitive pressures. The need to focus on and excel in core competencies means that outsourcing becomes a logical strategy to get an edge and deliver more with less.
While there are expectations of a challenging economic development in the coming two years, most software development is not driven by general market conditions but by technology trends such as;
- migration to the cloud,
- use of artificial intelligence
- generally increased efficiency
- focus on core competencies
Worldwide outsourcing spending is targeted to reach $731 billion by 2023. Indian outsourcing revenue passed $200 billion already in 2022. With approximately ten million employees working in the IT sector, it places the Indian software outsourcing industry in a class of its own.
Massive talent pool
India has a vast population of highly educated and skilled individuals, many of whom have already received their education in English from the preschool level. This means that companies that outsource their software development to India have access to a massive talent pool of English-speaking professionals with the technical expertise needed to complete complex software projects. In addition, the cost of hiring software developers in India is significantly lower than in many other countries, making it an attractive option for companies looking to reduce their development costs without sacrificing quality. The combination of a large pool of talented professionals and cost savings makes India one of the most popular destinations for outsourcing software development.
Overall, the availability of a large pool of English-speaking capable professionals is just one of the many reasons companies outsource their software development to India. With its skilled workforce, cost-effective solutions, and supportive government policies, India has become a leading destination for companies looking to develop high-quality software at an affordable price.
The cost advantages of outsourcing
Another advantage of outsourcing software development to India is the cost savings that companies can enjoy. Even though costs have increased due to demand, competence, and quality has improved over the years, labour costs in India remain lower than in many other outsourcing destinations. Companies can access a highly skilled workforce at a much lower price than hiring local developers, allowing them to save money while still receiving high-quality software development services.
Cutting-edge technology & infrastructure
Infrastructure investment is undoubtedly a wise investment for some businesses. Still, if your company’s revenue depends on the success of various projects, you would be better off not investing in your company’s infrastructure. You don’t have to because one of the primary advantages of outsourcing is the ability to scale infrastructure without spending fortunes.
After decades of economic growth and significant improvements, India today has a robust infrastructure with stable electricity and internet connectivity and supportive government policies that have helped to drive the growth of the country’s software development industry. The Indian government has implemented several initiatives to promote the development of the technology sector, including tax incentives, subsidies, and investment in education and training programs.
This can not only help your company save money, but it can also help you better address other challenges. You no longer have to deal with delays or multiple issues because a third-party expert handles them.
India has become a popular outsourcing location for software development, web design, mobile app development, analytics, AI, IoT, cloud and data sciences due to a large pool of talented engineers working with cutting-edge technology and infrastructure.
Furthermore, India has more than ten supercities with world-class telecom, mobile, and Internet service providers.
The language challenges
The outsourcing relationships would only deliver the expected value if the communication worked smoothly. The relationship between the client staff and the software developers is a critical part of the process. Communication barriers can be a huge obstacle to effective owner-developer engagement in software development outsourcing.
India has the second-highest number of English speakers globally (129 million). In addition, English is the primary language of business and communication, which means that most software developers in the country are fluent. This makes it easier for companies in English-speaking countries to communicate their requirements clearly and effectively to their Indian counterparts, reducing the risk of misunderstandings or miscommunications that can lead to costly errors or delays. Using Microsoft Teams or Zoom, you can now communicate with developers in India as easily as with any other English-speaking developers anywhere in the world.
Working with people from different cultures is a challenge. However, these can be mitigated with relatively simple means. It is essential to invest in the relationship with the people you will work with up-front and set up good communication channels and governance structures to ensure that communication flows fast and that misunderstandings are reduced to a minimum. At Gislen Software, we have also tried to address this area.
The time zone is another advantage for India. The country is 4½-5½ hours ahead of UK local time and 3½-4½ hours ahead of European Standard Time. If you have a tight schedule, draft the instructions during your day, and send them to the developers, and they may have the work ready by the time you get to work the following day.
The Indian Central Government and many state governments have gone the extra mile to support and encourage the IT sector. They are constantly updating and improving policies to favour software development outsourcing to India. The Indian government regards information technology as one of India’s top five high-priority industries. Software and IT services comprised 22% of India’s total export in 2021.
Aside from IT, the government is undergoing a paradigm shift into the world of technology, intending to establish cross-sector technical collaboration between the public and private sectors.
The Information Technology Act also includes several electronic contract and cybercrime provisions that address one of the most severe challenges of outsourcing software development: data security.
Quality of outsourcing
Given the lower costs, many companies may be tempted to outsource software development. However, while the low price may be the reason to consider it, the quality and the value added keep companies doing it. Over time, India’s competitive edge has developed from lower prices to more and more high quality.
India is, by revenue and manpower, the largest outsourcing destination for IT outsourcing and the most appealing destination for software development and IT-enabled services. Despite severe competition within and outside India, software development companies in India can consistently produce top-quality software solutions.
As companies want to remain competitive in the volatile global economy, nobody can afford to neglect the benefits of software outsourcing to India, particularly given the talent pool size and the cost level.
Of course, even in India, you will want the services of a renowned software outsourcing company that gives you a competitive edge over your rivals. It would be best to have a reliable, affordable provider with a long track record of providing excellent offshore services. We work with leading Scandinavia clients who would be happy to vouch for us! At Gislen Software, we are proud to say that we can provide you with all that and more, putting you ahead of the curve. Just contact us and let us take care of the rest.
Mikael Gislén is the Managing Director of Gislen Software, a Swedish-owned Indian Software development company located in Chennai in South India. Mikael went to India in 1993, and the company was founded in September 1994. Gislen Software provides high-value software development services to Scandinavian, UK and US clients, has low attrition levels and has many satisfied, well-known clients.