Outsourcing is the process by which a company delegates non-core activities to an external organization which is specialized in the function. Though companies have always subcontracted some activities to their vendors, outsourcing has become popular since the 1990’s.
Earlier large organizations would outsource some of their non-core activities like customer support and maintenance to local vendors. This would reduce the cost of hiring employees and result in greater profits. With the improvement of telecommunication facilities and the internet, companies have started outsourcing more activities like human resources, payroll, accounting and software development.
Outsourcing of software development has become popular since most of the work can be done remotely . The inputs required to develop the software can be transmitted over the internet and the completed work can also be transferred to the end user online. Since most programming languages can easily be learnt, outsourcing software development to low cost countries results in cost reduction.
Writing and debugging software code is tedious and time consuming, so many larger Western companies prefer to focus on product development and outsource software development to low cost countries. India, Philippines and East European countries like Poland, Romania and Ukraine are the countries to which software development is currently outsourced.