The workstation introduced in the mid-1980s, had sophisticated graphics and the computational capabilities required by small enterprises. These kinds of firms had shifted from outsourcing data processing services to running their own in house workstations.

The platform independence that was raised from the U-W standard, merged with the rise in demand for user customized software by small firms, resulted in a large custom software industry.

With the commencement of 1990s, the growing computing power and declining cost of the PC improved its capabilities to program in UNIX and C language. The PC, thus, replaced the workstations completely as the hardware platform for software programming. Later in the decade, the huge success of PC-based networks have simplified and increased the accessibility of applications to many more users within the organizations.

The earliest software services to be outsourced in the initial days include:

·         Managed services

·         Time-sharing

·         Integration and maintenance.

All these services need proximity to the client. Later work, such as product development and customized software development could, at least partly, be done remotely.

User Customized software did not, considered as important till the late 1970s. In the early 1970s, US firms explore offshore regions for cheaper ways to develop software products. India, Ireland and Israel were preferred choices given the widespread knowledge of English and relatively low cost of programmers and skilled software professionals.

The implantation of a Technologically sound and technically sophisticated industry like software into a less developed host nation has particularly been explained by the access of transnational corporations to domestic resources facilitated by policy reform (often after efforts to establish industry through protectionist policies have not successes).

Software might be considered a particularly complex kind of service to offshore, because the employees required to be skilled, relative to what is needed for the offshoring of, say, routine call-centre work or voice transcription. Where is such skilled workforce to come from if the atmosphere lacks a home market? As software development is very closely linked with customer requirements and needs close coordination within the firm.

Even within software, one would expect that work to support product software, done by TNCs, would be the point of origination. The developing nation’s engineers could initially provide just technical support and maintenance. Indeed, Israel and Ireland started in this fashion.

Domestic and transnational firms jointly discovered an innovative solution. Since software development could not come to India, skilled Indian programmers were sent to developed nations. It’s all began in 1974 with the mainframe manufacturer, Burroughs, asking its India sales agent, Tata Consultancy Services (TCS), to export programmers for installing system software for a U.S. client.