Cutting costs and increasing efficiency are paramount as the economy continues to suffer.
1. Move work offshore or nearshore
This is probably the most common answer. It is the theme of the entire IT services industry, and while it still has numerous challenges, there is no denying the cost-cutting results it can deliver. Putting aside possible delivery challenges, results associated with reduced cost alone have been displayed in literature both quantitatively and anecdotally.
2. Managed Services and Offshore Staff Augmentation Models
Software development services are multi-dimensional, but the basics can be boiled down to management, execution, and reporting. These three disciplines, or legs of the software development lifecycle, are being successfully offshored in today's market.
This approach allows a client to effectively "outsource" testing activity to an IT vendor, and manage through the use of Service Level Agreements (SLAs). Applying a managed service approach with an IT services vendor allows the client to achieve its cost reduction goal while empowering the vendor to design a delivery model that can help it achieve it's required margins.
Managed services are not the only option when it comes to reducing project costs. Another, more basic, approach is to offshore work in a staff augmentation mode. While this is more difficult to manage on a day-to-day basis, it can most certainly deliver the lower cost alternative.
3. Remote Infrastructure Management
Another aspect to software development services is management of the computing environment. It takes people, time and projects to manage software environments. There is no reason why this type of "transactional" work can't be done from an offshore location.
The nature of the work involves building environments, resetting or "ghosting" platforms and helping to effectively manage data repositories. This work, which is highly technical, is very well suited for offshore due to its non-business related aspects.
This is often referred to as "Remote Infrastructure Management (RIM)", and is another opportunity for an organization to shift expenses associated with that work to a lower cost region of the globe.