Offshore software R&D

Offshore Software R&D is provision of software development services by an external supplier positioned in a country that is geographically remote from the client enterprise; a type of offshore outsourcing. In this context, it refers to the offshore development phase of a software. The main reason behind the companies to use offshore software development services is the higher development cost of the local service providers. The global software R&D services market as contrasted to ITO and BPO is rather young and currently is at early stages of its development, but India is leading the world in this field .
Countries involved

While India, Ireland, Canada and Israel were the four leading countries that controlled this business in 2003[1], the percentages shifted by 2009 when the front-runners, India and the Philippines, had a combined share of the world market for business process offshoring of about 50 per cent. The UN Information Economy Report 2010 [2] reads that "the second largest exporter, Canada, continued to shrink to 21 per cent by 2009. Beyond these top three locations, several economies from all continents are making inroads as offshoring destinations. The group of “other destinations” in figure III.5 surged from 4 per cent in 2004 to 16 per cent in 2009. The main such locations in 2009 included China, Thailand and Sri Lanka in Asia;26 and Argentina, Brazil, Costa Rica and Mexico in Latin America. On the African continent, Egypt, Mauritius, Morocco and South Africa all have more than 10,000 offshore jobs in the IT and ICT-enabled services sector (Everest Research Institute, 2009). The share of countries in Central and Eastern Europe was unchanged at 6 per cent between 2008 and 2009." According to Gartner Group[3], only these four countries are capable of scaling up enough to meet the demands of large-scale projects. Brazil has been attracting attention due to the closer timezone to the US eastern cost, besides closer cultural affinity[4]. Other offshore software development destinations include Eastern Europe (Slovakia, Armenia, Romania, Ukraine, Belarus, Serbia, Czech Republic, Poland, Hungary, Russia), Pakistan, Bangladesh, Nepal, Vietnam, Philippines, Egypt, Morocco, Sri Lanka, Argentina and Bolivia. .

Offshore R&D hubs

According to Gartner group's report, global cities are categorized into Tier I, Tier II and Tier III based on numerous factors such as the quality of infrastructure, global connectivity, and availability of human capital[3], in order to rank the best places to set up an offshore R&D location. The report concludes that cities like Bangalore, Yerevan, Mumbai, Ahmedabad, Bucharest, New Delhi, Hyderabad, Chennai, Pune, Indore, NOIDA, Gurgaon, Thiruvananthapuram, Greater Toronto Area, Ottawa, Montreal, Haifa, Tel Aviv, Dublin, Kiev, Moscow, and St. Petersburg would be the ideal places, and hence 'Tier I' cities to offshore R&D.