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Mixed bag for offshore software development industry

date: 20 August 2012
reading time: 2 min

Economic figures published a few days ago paint a mixed picture for the industry. In the UK both the CBI and the British Chambers of Commerce reduced their growth expectations for 2012 this month. This effectively means that large, medium and small business are all slowing down their output.

Economic figures published a few days ago paint a mixed picture for the industry. In the UK both the CBI and the British Chambers of Commerce reduced their growth expectations for 2012 this month. This effectively means that large, medium and small business are all slowing down their output. The consequence of this for the offshore software development industry is two divergent trends. First a reduction in larger outsourcing contracts, typically those that are around developing new products. This is in sharp contrast to the results of the Harvey Nash survey which I blogged about a few months ago. The Harvey Nash survey showed that CIOs planned to invest in developing new products and services that would ultimately increase revenues. This would have a positive knock-on effect on outsourcers who would see increased demand for their services.

However the August slowdown is evidenced by the KPMG pulse survey, which shows a reduction in contract renewal and greater evidence of cost-savings being required by organisations before embarking on new contracts. On the other hand the renewed economic slowdown is continuing to do what the slow-down has been doing since 2009 – increase the amount of smaller, outsourced contracts where financial gain is immediately apparent.

This is a good thing for Future Processing and similar firms, that can demonstrate cost savings of 50% or more when compared to developing software in the UK. However, perhaps we should take this all with a small pinch of salt: economic figures do seem to have been swinging around a bit this year. September may bring us something different again……

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