A substantial cost saving can be achieved by IT outsourcing to India, owing to the yawning gap between the labour costs in India and that of the developed countries. Studies and analysis suggests that outsourcing business to India saves as much as 70%. Corporate giants in the United States, Europe, and Japan prefer India for cost-effective and high-quality software solutions.

The relatively low cost of manpower makes India, a highly sought after destination for sourcing cross-border IT-enabled services. India provides maximum number of software engineers to Silicon Valley, West Europe and the Asia Pacific IT industry. The country is moving towards next generation telecommunication technologies.

Offshore software development is becoming a highly popular concept. It is a win- win situation for both developed and developing countries. While the developed countries can access services and infrastructure at cheaper price, the developing country flourishes with the foreign investment. One such country adding big to the cost-quality benefit is India.

India is becoming a hot destination for the offshore software outsourcing. India will continue to support Information Technology, taking the most advantage from the business of software development services. But with the big bunch of IT companies’ coming into play everyday it’s really difficult for offshoring companies to decide among various offerings. Deciding the right price between the diverse ranges becomes a tricky stake. Here is a brief go through of where actually this cost cut comes from to help you decide the raw price of offshore software development in India.

Huge Resource Pool:
India offers a large workforce of highly-dedicated, well-educated, English-speaking professionals. More than 1 lakh engineering graduates every year transform India into the second largest English speaking IT professional's pool in the world.

Low tariffs:
What good about the country is that even after having an impeccable IT infrastructure and well knit telecommunication infrastructure the utility cost is low. Firstly, rental and real estate costs are far lower in India than in the developed countries. Additionally the administrative cost also makes it easy to operate office in India. Furthermore the low cost of basic amenities such as electricity and water is also adding up to the offshore software development advantage.

Low technology cost:
The highly competitive environment in India has ensured low pricing of mobile services, Internet, cable TV services, E-Commerce, and other forms of Information Technology. In terms of long distance calls; India telecom infrastructure has made remarkable progress. Latest technologies, like use of fiber-optic cables has enhanced call-clarity and reduced call-costs to a large extent.

Low cost of human resource:
Labor costs are a large part of the total costs of a company’s products or services. Since they are such a major part of what makes up the selling price, these costs must absolutely be kept down in order for a company to survive. Due to lower per capita income the cost of labor in India is times lower than that in US.

Here again the bigger advantage is the skill and education of the labor force in India. And lastly the productivity of labor is also great because of the work culture and technology available. Therefore the offshore software development with India is not only cost cutting but value adding advantage as well.