Question

The United States is home to some of the world's leading computer software companies, most of which commonly outsource software development to other countries, including Egypt, India, Ireland, Israel, Malaysia, Hungary, and the Philippines. 1.Why do you think these countries became suppliers to the software industry? 2. Do you think that development of the industry in these countries is a threat to companies in the United States? Explain. Your response to each question should be a minimum of 6 sentences long.

Answer 1

Answer to question 1 :

The reason why these countries led by India have become supplier of outsourced software services to USA :

1. Significantly large talent pool with good educational background
2. Proficiency in English as language
3. Good educational background including knowledge of mathematics
4. Cheaper yet skilled workforce in these countries.

Software development is done in both modes i.e. a) Off site development and b) On site development. In case of off-site development, it is done in the respective outsourced countries e.g. India, Egypt, Israel etc. In case of on site development, it is done in in client’s location in United States . Since, there is no physical movement of goods which makes outsourcing activity really efficient, software industry of US has really witnessed tremendous growth in outsourcing activity.

Answer to question 2 :

It is true that such outsourcing activities are displacing jobs for American native citizens in large numbers since these jobs are being sent out of the country. However, the point to be noted is that beneficiary to these activities are American industries including banking and financial institutions who are meeting their regular operational and maintenance requirements at much lower cost. This action is helping them to control their cost and remain competitive in the market place. Remaining competitive is an very important agenda for American industries and economy which otherwise will see decline of American companies including closures due to cost pressure. USA can ill afford such situation since millions of American lives are dependent on these industries . Thus we can summarize that , while outsourcing has definitely caused loss of jobs in a certain section of the American Industry , it has been outpaced by beneficial effects it has created for other industries and relevant jobs associated with such industries.