Working Through Outsourcing: Software Practice, Industry Organization and Industry Evolution in India

Current debates surrounding “outsourcing” and “offshore” limit our understanding of the dynamics of services in the global environment by failing to 1) carefully define terms and 2) delineate key differences in production architectures, practices and regional impacts. Defining offshore and outsourcing is important because such definitions inform the unique structure of services in general and software services in particular. They also open a pathway to understanding similarities or differences with new IT enabled-services. The changing nature of the definitions is really a reflection of questions surrounding the costs and benefits of variations on how services are developed globally. This paper begins by considering definitions of “offshore” to work through the unique aspects of IT services, and how they have affected the evolution of specific regions in the global economy. A central case to begin to evaluate these issues is the emergence and evolution of the Indian industry. While very well known, revisiting the Indian case through the lens of the state of Andhra Pradesh helps synch actual industry evolution with current myths and realities of offshore development. The Indian case also highlights general trends that indicate the limits and possibilities for offshore and outsourced IT services in the global industry through the end of the decade. The final section concludes with a consideration of what such industry patterns indicate for the regional growth and development through offshore production.