Ten years ago, all offshoring activity was done for manufacturing. More recently, some countries have developed well educated, technical workforces. This has allowed for the beginning of offshore software development. A few years ago, all of the best programmers were located in North America, Europe, or Japan and earned a fairly substantial wage. Some of the world’s best programmers are now living in China, India, and other parts of Southeast Asia. This area of the world has become the main destination for offshore software development. As well, the programmers in these countries will work for considerably less than American programmers. This has made the use of offshore software development an extremely lucrative way for software companies to do business. Their expenses are drastically reduced, sending their margins skyrocketing.
However, despite the decrease in costs from using offshore software development, many programmers in these countries are starting their own companies, creating much more competition for the older, more established companies. Despite the negative effect this can have on the older companies, it is a beneficial for the consumers who will eventually see more and better products for less money. There has also been a negative public reaction to offshore software development. Many people living in developed countries believe that offshoring is not a bad practice as long as it is unskilled jobs. Offshore software development is taking high paying, technical jobs away. The counterargument of this is what is called creative destruction. While offshore software development moves programming jobs across the globe, developed countries will generate new and better jobs.
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