Offshoring is now a widespread business practice in the software industry and it has become “business as usual”.

Offshoring is now accepted as a normal business practice across the globe, particularly in the US, says SandHill Group, creator of high-impact research reports for the IT industry.

According to its latest report on its “New Development Trends”, SandHill Group in association with Persistent Systems found that 84% of the software executives (CIOs/CEOs) surveyed said that their companies are currently engaged in offshoring and another 4% say they plan to move operations offshore in the next 12 months. This is as against the previous findings of 63% and 21% respectively in 2003, the report added.

According to the report, majority of the respondents said that offshoring has become “business as usual” and two-thirds of the executives surveyed agree that compared to two years ago, offshoring is now accepted as a normal business practice in their companies.

India remains the destination for the majority of software offshoring activity. The report pointed out it has been due to vast talent pool, high quality work, good communication skills and of course the low costs.

The report said that software companies have become more reliant on offshoring. More than 80% of executives say that their companies are more reliant on offshoring now than in 2003. In the same way many venture capitalists require their portfolio companies to offshore much of their product development, other VCs believe that developers need to be in close proximity to succeed.

The desire to cut costs remains the primary driver in the decision to offshore. Nearly 60% of respondents cite cost-cutting as the primary reason to offshore. Additional reasons include workforce flexibility and faster time to market, the report said.

While cost-cutting remains paramount, there are other key motivations for executives engaging in offshoring including gaining additional skills and keep pace with competitors who are offshoring. The survey was conducted among 45 CTOs/CEOs and heads of R&D centres.

( www.financialexpress.com)