Offshore Software Development Outsourcing

Until the global economic downturn of the new millennium, demand for information technology (IT) professionals exceeded supply mostly due to specific skill sets such as integrating legacy applications with Web development, project management , telecommunications, mobile commerce, and enterprise resource planning. More firms are turning externally not only to local vendors but also to services across the globe (Carmel, 1999). Staff supplementation from domestic contractors has evolved to a sophisticated model of partnering with offshore/nearshore software development firms. Many of these relationships evolved from a short-term project need for select skills to a long-term commitment of resources, cultural diversity efforts, and dependencies that integrate vendors as partners. The most pervasive IT project, Year 2000 (Y2K), had constraints of skill sets, time, and budget. IT managers had to look at many alternatives for achieving compliance. Firms that planned as early as the mid-1990s had time to experiment and build new relationships. With governmental sanction and support, some countries and their business leaders recognized the competitive advantage their labor force could offer An unusual need for services because of Y2K, economic disparity within a global workforce, and proactive efforts of some governments led to the fostering of offshore software development. Early companies to outsource offshore were software vendors. Managing offshore development smoothly took years and a certain type of project management expertise in addition to a financial commitment from executives. The activity involved new applications and integrating