Last Saturday the Economist magazine published a special report on the state of the outsourcing industry. The report focuses mainly on the US and one of its recurrent themes is that less work is going offshore in North America, with several examples given. It is certainly true that in the many US industries much of the work most suitable offshoring has already been offshored. It is also true that with global recessionary cost re-balancing, some call centre and IT support work has come back onshore, both in Europe and North America as the cost advantages of India have been eroded.

However this is not the trend that the Polish software development industry is seeing. Rather we are seeing European companies outsource more, and more complex development work to Poland. For example, in the past year alone, many of our clients increased the size of projects they undertake with us and we also won several new clients. In fact our revenues grew 729%.

I think this trend is based on a range of reasons. Foremost among them is that while not all types of work are equally suited to outsourcing, software development is among the most suitable.  Development is not an immediate customer facing function for most businesses in the way that a call centre is, so if things should go wrong, brand damage is much more contained.  Software development is a highly-skilled, truly global discipline. These skills are sometimes available to a higher level in another country. Technical language and culture between developers around the world is also more homogenous and unlike standard customer service and BP outsourcing, cost isn’t always the main reason for outsourcing a piece of software development. In short, offshoring software development is generally not high-risk outsourcing.

One of the articles in the Economist special report states, “ … firms are becoming more aware of the disadvantages of sending work to the other side of the world. More and more companies want IT and business-process tasks to be done locally, especially when the work is complex and strategic.” Yet at organisation headquarters skills are often lacking, headcount is tight and costs can remain higher. I would argue that for many firms the answer to this problem lies in nearshoring, which takes us back to the Polish success story.