According to The Economist, “as the information technology industry’s emphasis is shifting -- away from innovation and towards execution -- so is its location.” More specifically, information technology (IT) jobs and resources have been moving overseas due to the combination of US software producers’ need to cut development costs and the large and inexpensive labor pool that exists in countries like India. The result has been the creation of an international supply chain for the IT industry similar to what the manufacturing industry developed in the 1970s.

Although offshoring has reduced the cost of developing software, it has increased software development’s complexity. At the same time, there has been considerable backlash from US software developers who have lost their jobs to cheap labor overseas. In some instances, this backlash has led to the drafting of legislation that would prohibit companies from outsourcing software to offshore sites. It remains to be seen who will win the offshoring battle, cheap international labor or the more expensive but closer to home US labor.

However, not all IT professionals in the US are at risk of losing their job. Complications involved in communicating with offshore facilities provide job security to some IT professions. Furthermore, there have been cases in which offshoring has failed to generate the efficiency and product quality expected by US employers.

This project will analyze the impact of the offshoring movement on both the US software industry and the software industries growing overseas (primarily in India). We will discuss the economics behind this movement, the social factors that may eventually limit it as well as which IT jobs are at higher risk of being sent offshore, and in which instances offshoring has not proven to be an idyllic cost minimizing solution.