Offshoring

Bangalore, Home of the Next Angry Birds


The entrance to MoFirst Solutions is not far from the trash piles and stray dogs of one of Mumbai’s many slums. Inside, it looks like the offices of any of India’s other programmer-for-hire companies, part of the country’s $88.1 billion a year information technology services and outsourcing industry. Two dozen workers sit shoulder to shoulder, with no air conditioning, coding on laptops. The main difference? They’re building iPhone apps.

While IT services still dominate the nation’s technology industry, companies such as MoFirst are tapping India’s next wave in outsourcing, with thousands of programmers hired in recent years to capitalize on the demand for building programs for Apple’s (AAPL) iPhone and iPad and devices running Google’s (GOOG) Android software. Mobile-app outsourcing may be a $5.6 billion annual business by 2015, according to estimates from Forrester Research (FORR), and if history is any indicator, much of that will head to the subcontinent. “India is a logical place to do it for the same reason the software and services model has worked here: lower cost,” says Anshul Gupta, an analyst at research firm Gartner (IT) in Mumbai.

Requests for programmers who write code for Apple’s iOS platform rose 20 percent between the first and second quarters of this year, according to Elance, a Mountain View (Calif.) broker that matches outsourcers such as MoFirst with those who want to create apps. Demand for programmers with Android skills rose by 15 percent, while developer requests for Research in Motion’s (RIMM) BlackBerry devices increased by 3 percent, according to Elance.

“The iPhone stuff is very, very hot,” says Ajai Shankar, who spent 12 years in the U.S. as a software programmer for companies including Wal-Mart Stores (WMT). He moved back to India this year to set up his own mobile-app development shop. “The struggle people have nowadays is that once you’ve developed an application for iPhone, the next thing you know is you have to do the same for Android.”

MoFirst bills its clients, who are primarily in the U.S., the U.K., and the Middle East, $15 to $20 an hour, says Akash Dongre, the company’s chief operating officer. That compares with $50 to $100 per hour charged by developers in the U.S. One of MoFirst’s recent creations, released early this year, is Friends Aloud, an app that speaks status updates from Facebook. MoFirst charged a Texas-based entrepreneur about $8,000 to develop the app, less than half what it would have cost in the U.S., and completed it in about three months, says Dongre.

MoFirst’s competition includes QBurst Technologies, which started in 2004 as a Web developer in the southern Indian town of Trivandrum and in 2008 turned to building apps. Qburst has helped develop 150 mobile apps for customers in the U.K. and U.S. That includes an iPhone app for St. Albans (U.K.)-based PrivateFly, which allows users to search for and book private jets; an e-commerce iPad application for Simba Toys; and an iPhone shopping search application for thefind.com. The company, which employs 400 people, has seen overall revenue, which includes website and iPhone app development, jump 76 percent, to $3.18 million last year, says Manjith Kamalasanan, a business development manager at Qburst.

Hiring has gotten harder. “Competition is increasing a lot,” says MoFirst’s Dongre. At his company, new hires fresh out of college earn a monthly salary of 20,000 rupees ($437), but many receive 40 percent raises within six months of joining because of competition and poaching from other mobile development shops. Kamalasanan says Qburst needs to recruit half a dozen senior developers and a dozen less experienced ones in the next three months.

The rise of mobile-app developers signals Indian technology companies may be evolving away from the old software services model and toward building full products, says Gartner’s Gupta. “It’s not completely the sort of outsourcing, offshoring activity that’s been going on in India for a while,” he says. “It is more about creating an application from scratch; it has more to do with R&D and invention.”

The bottom line: India could benefit as app development for iOS and Android devices becomes a $5.6 billion outsourcing business by 2015.

Gokhale is a reporter for Bloomberg News.

Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • AAPL
    (Apple Inc)
    • $105.22 USD
    • 0.39
    • 0.37%
  • GOOG
    (Google Inc)
    • $539.78 USD
    • -4.20
    • -0.78%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus