Software Outsourcing Offshore— Business and Legal Issues Checklist

Article by Rajiv Patel and Ralph Pais.

Outsourcing particular business functions is not something new. In the late 1970's and early 1980's many companies "outsourced" many of their "back office" functions to service bureaus that performed these services for many customers, thereby gaining economies of scale from their investment in what was then, and is still, expensive mainframe computer hardware and software systems. Similarly, in the 1980s, large U.S. integrated circuit chip ("chip") design companies began moving manufacturing of their chips to offshore fabrication facilities (or "fabs") that also leveraged economies of scale to produce large volumes of chips for many chip companies. This eliminated the need for chip companies to raise capital or spend the time necessary to establish their own manufacturing capabilities. The benefit for these companies included reducing their costs to produce their chips, while freeing up capital and time to develop newer and better