First it was about offshoring software development services to India. Next offshoring moved beyond software development, and signs are emerging that business functions such as financial analysis, customer relationship management, and branding are moving offshore while US labor markets are not affected.

Well, now it appears that both manufacturing of software and the development of the companies themselves will be moving to India. From InformationWeek:

Increasingly, Indian software entrepreneurs want to put their own companies' names on product labels, at home and abroad, by capitalizing on their country's highly educated and low-cost workforce to build and sell software for everything from back-office programs to customer-facing applications. It could have far-reaching consequences for software prices worldwide. Not only would low development costs let Indian vendors reduce licensing fees, but the competition could force North American and European vendors to adjust their prices downward.

"Prices will inevitably come down, and we will go through another revolution like we had in IT services," predicts Marc Hebert, executive VP of Sierra Atlantic Inc., a Fremont, Calif., company that builds software for North American companies, including Siebel Systems Inc. and Agile Software Corp., from development centers in India.

Of course this shift will take some time, but considering that the US supplier market in the software sector shows signs of being at overcapacity, something is bound to break. There are already signs that management, entrepreneurs, and ex-pats may break to India (see New York Times article on MBAs bypassing Wall Street for India).

Steve Shu