Increasing numbers of businesses are set to send their
software development projects offshore to reduce IT costs,
according to Forrester Research.
In a report out today (13 July) the analyst firm said that even
after allowing for additional costs of communication and remote
management, many organisations have reported net savings of between
15% and 30% on total development project costs by moving work
offshore.
India remains the most popular destination for offshore development
work, the report said. Indian providers will soak up £672m of the
UK's total £768m offshore services spend in 2004 as companies such
as Thames Water, National Grid Transco and Marks & Spencer buy
their services, Forrester said.
Andrew Parker, principal analyst at Forrester, said more than 90%
of IT directors interviewed believed offshore development offered
value for money. "Users benefit from lower labour costs, where the
day rate is a third to a sixth the cost of European programmers,"
he said.
The quality of work offshore was also better than much of that done
in Europe, Parker added. "This is partially due to Indian suppliers
offering a CMM [capability maturity model] to level five, which
specifies structured development processes," he said.
For some large firms, moving in-house services offshore is also
becoming an attractive option. HSBC is now running a central IT
service centre in China, where the bank directly employs the staff
and owns the systems.