Europe Union
Published: 12/05/2021

How does COVID-19 affect software development outsourcing?

How does COVID-19 affect software development outsourcing?

COVID-19 has affected the entire modern world, and the software development industry is no exception. The most prominent outsourcing destinations are under the severe influence of ongoing pandemic, which affects the companies that choose to use local services.

Outsourcing market

Some centers support the largest companies in customer service, technical support, or software development in countries such as India. Thanks to cost-effective service, India became support for many organizations, including top companies on the market, such as Microsoft, Google, IBM, and CISCO. India dominated global outsourcing having 67% of the market share (2018).

IT industry in India is estimated to be more than $150 billion, growing more than 10% per year. C SharpCorner believes India will become the most prominent hub of software developers in the world by 2023. The cost is the main reason why companies worldwide decide to outsource their services to this country. The development costs are 30-35% lower than in the US and Europe.

However, the difficult situation in these countries, caused by the increase in infections, lack of access to medical supplies, and lack of preventive action, has resulted in up to 25% of employees being absent in some teams. It causes enormous delays and causes significant disruptions to the operation. Companies using extensive outsourcing in India are already experiencing disturbances.

When the whole world is vaccinating its citizens and seeing it as a way out of the crisis, the situation in India is becoming more and more difficult. There, the epidemic is escalating with remarkable speed. India has had more Covid-19 cases in the last days than anywhere else in the world.

Changes in the outsourcing strategies are needed right now

In recent years, India reported a 70% loss in outsourcing market share with call centers and related services. However, most of the loss is in favor of the Philippines, not because it is safer but cheaper.

This is the time to reevaluate the outsourcing strategies and look for a qualified workforce with a quality of life secured at the level that allows them to adjust when another crisis hits. The low price does not come out of anywhere. India outsourcing companies struggle to provide their employees with working conditions adapted to the pandemic situation.

What can we do?

We should not turn our backs on India while it is struggling with the crisis. But companies that outsource their services there should take responsibility for the people working for them like they would in the case of employees in their country of residence.

The current situation shows that the existing strategies will not work either side in a long-term approach, and the ongoing epidemic has only exposed it. Remote work is a future not only because cost reduction, but also to ensure the safety of development teams in the post-covid world.

We want to continue to use the centers in India or other emerging outsourcing locations because we are facing a shortage of qualified workforce in Europe or the US. However, we should do it responsibly, respecting the principles we adhere to in our countries. Hiring offshore teams from other countries we need to ensure the adoption of safety requirements. It is a key to develop our own responsible business and help businesses in countries like India.

The current situation is difficult, but it may be a turning point. Let’s hope it will introduce such important and necessary changes in outsourcing, meeting both business needs and social needs of employees. We need to make sure that the processes we outsourced will deal with not only coronavirus but digital transformation challenges.

How to choose the right outsourcing strategy?

Outsourcing IT services is not only a matter of the lowest cost that our contractor offers. You need to take into consideration staff qualifications, work conditions, and the quality of the service. Our team will share tips on finding the right place to support your operations in IT in the upcoming weeks.

Make sure to choose the right outsourcing partner thanks to the dedicated article we have prepared for you.

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