News in View: Offshore outsourcing - the Asian boom

The IT skills shortage and rocketing wage demands are driving increasing numbers of software companies out of the US and Europe in search of staff.

But although the stereotypical view of countries like India is one of a haven of plentiful and cheap labour, the marketplace is changing.

According to Tony Sumpster, business development director of outsourcing company HPS, India isn't just about code crunching and maintenance anymore. "It's moving into high-value work where it's really able to tackle mission-critical, high-value projects," he said.

He added that the wage differences between Indian high-tech workers and their US or British counterparts will only remain for three to four years. "They're raising wages at about 20 or 30 per cent a year, which is huge growth based upon all the work that's going in."

One company that has moved its product development and research to India is US network management specialist, Entevo.

Amir Hudda, the company's chief executive, said: "India has a very strong educational system, and that has resulted in a very strong, trained, manpower available. What it's giving the industry is not just the number of people - but a number who are very highly qualified in all of the latest development tools."

Hudda added that in the last six or seven years, the Indian government has worked to encourage high-tech investment. "The government has realised that this is a huge export industry. It now has a program where you can export software and all your revenues are tax free for ten years," he said.

Sumpster said he expects more software companies to move into countries like India: "It's inevitable that more software development will be taken away from the western world, just because the skilled resource that's required isn't available."

You can see the full News in View in Silicon's Outsourcing channel.