Outsourcing non-core and IT services has become the business strategy for growth in the new millennium. Software outsourcing refers to the system where companies outsource their software needs, often to an IT consulting firm.

The consulting firm or IT BPO delivers customized, cost-effective solutions in areas such as e-finance, e-business, mobile solutions, telecom, data networking and so on.

Major Indian software vendors have developed a global service-delivery capability, although the mindset is changing from simply being IT 'service providers' to providing solutions.

These firms are highly successful in software outsourcing because they offer the largest pool of technical skills in the world. Indian universities send 180,000 engineering graduates into the market every year.