Outsourcing is often closely related to offshoring in software development, but you can outsource onshore and you can create offshore subsidiaries. This seems to be the current trend for large occidental organisation that want to profit for lower costs in countries like India, but maintain a high control on the process. However, developers in Europe or North America feel no differences if their Asian “competitor” work for a subsidiary or for another organisation. A recent poll from Methods & Tools wanted to know if applications are developed exclusively inside organisations or if outsourcing software development services are used.
The majority of the 346 respondents were equally split between those that are not using outsourcing and those that use it, partially or completely. Complete outsourcing is done by only 6% of participants. There is a need to keep internal expertise when outsourcing is used. The phenomenon of outsourcing of IT services is well known. An article of McKinsey Quarterly estimated the global market for IT and business process outsourcing to $30 billion. The part of software development in this growing market is less known and discussed. In another recent survey published by the Software & Information Industry Association (SIIA), 60% of the participants were offshoring software development efforts and half of them were doing it with external providers.