Introduction

Outsourcing in broad terms is a transfer of some business functions or components of business processes to an outside contractor. Outsourcing means a performing of specific tasks, business functions or business processes by outside organization that usually fall out of company's core competencies but, however, are crucial for regular functioning of business.

Types of Software Development Outsourcing:
	In-house software development (no outsourcing).
	Many organizations have their own IT departments catering to their software needs. These organizations develop the required software and information systems within their own capacity and productivity limits.
	Product Component Outsourcing.
	In product component outsourcing, the developer is contracted to develop one or several parts of a software system. In case of complex systems when the organization does not have the capacity or required skill to develop a particular component such component is outsourced. Software Development Process Component Outsourcing In outsourcing parts of software development cycle, the customer organization contracts for an external group to perform all or certain functions of one or more of their process steps.
	Software Development Order (total outsourcing)
	In this type, the organization outsources each and every activity associated with the software, which includes design, development, programming, testing and maintenance. The main benefit of this type of outsourcing is to focus on the organization's core activities.

Pros of Outsourcing

Two or three years ago the main argument for outsourcing was a cost saving. Saving is achieved through specialization of outsourcer that on one hand reduces costs by means of knowledge and skills wholesale, while on the other hand provides quality of functions at the same price due to competition. Nowadays the majority of managers think of focusing their efforts on core competencies of the business by outsourcing functions of developing and maintaining of electronic sales system to a specialized company. For example, the trade company itself may concentrate upon a range optimization, logistics, market research, and above all upon sales and their planning. That is what the vast majority of big international wholesale and retail trade networks have done. When supplying needs are delegated to outside firms rendering outsourcing services within specific area, the company gets freedom to redistribute resources to support its core activities. This results in more freedom for directing investments to the company's infrastructure.

The Joint Center of Economic Studies has found in executives' responses such arguments as quality of services, risk sharing. Due to a "wholesale" of its services an outsourcer has more reasons and opportunities to invest into purchasing and mastering of new technologies that may be unprofitable within individual company. It's important that outsourcing implies performing numerous one-type tasks thus helping to acquire a hands-on experience. To some extent this is the strategy of risk diversification between consumer and contractor.

The following can be mentioned as the main benefits of outsourcing:
	Significant cost savings.
	Redirecting IT and business activity as a whole into core competencies.
	Facilitating and supporting major organization change.
	Improving processes, skills and technology in use.
	Direct profit generation through joint ventures and vendor partnership.

Global Software Outsourcing

Global Software Outsourcing (GSO), also sometimes called as Offshore Software Outsourcing, is the outsourcing of software development to contractors outside the client company's home country. The first cases were as back as 1970s and 1980s. However, it was during the 1990s that GSO really took off.

At that time Information Systems outsourcing has been "normalized": come to be seen as a normal part of a company's Portfolio / Case Studies of management procedures. The metaphor of outsourcing has changed its meaning from wild beast to be tamed, to beast of burden to be harnessed. Sub-contractors move from arm's-length hazards to potential partners.

Clients have therefore been keen to normalize GSO procedures in order to increase the benefits of outsourcing. These benefits include not merely the greater savings but also improved access to local manpower and IT market.