Low development cost of mobile apps brings next phase of outsourcing in India

Between piles of trash and stray dogs near a Mumbai slum is the entrance to MoFirst Solutions, where two dozen workers sit shoulder-to-shoulder with no air conditioning and write code for iPhone apps on laptops. "The rates Indian developers charge are very low," said Akash Dongre, chief operating officer at MoFirst Solutions, where clients pay as little as $15 an hour for a programmer. MoFirst is tapping India's next wave in outsourcing, with thousands of programmers that charge a fraction of Silicon Valley prices to capitalize on demand for programs for Apple Inc.'s iPhone and devices running Google Inc.'s Android software.

Developers-for-hire for mobile applications may generate $5.6 billion in revenue by 2015, a 14-fold jump from this year, Forrester Research Inc. estimates. "India is a logical place to do it for the same reason the software and services model has worked here: lower cost," said Anshul Gupta, an analyst at research firm Gartner Inc. in Mumbai. Applications on Apple's online store have been downloaded more than 15 billion times since its opening in 2008 -- with the Cupertino, California-based company getting a 30 percent cut on each sale --as the surge of iPhone sales spawned demand for games and applications. "It's not about the device -- that's not what makes sales happen -- it's about the ecosystem ," said Gupta. "You need to have applications."

LARGEST APP OUTSOURCER

Companies or individuals seeking to hire can turn to sites such as Elance Inc.'s service , where companies such as MoFirst will bid to win app-development projects lasting from a couple of weeks to several months. India is the world's largest recipient of outsourcing orders, according to Elance, whose website showed more than 450,000 professionals offering their services as of yesterday. Requests for programmers who write code for Apple's iOS platform rose 20% in the second quarter, according to Mountain View, California-based Elance. Demand for programmers with Android skills rose by 15 percent, while developer requests for Research In Motion's Blackberry devices increased by 3 percent, according to the company. "The iPhone stuff is very, very hot," said Ajai Shankar, who spent 12 years in the US as a software writer and moved back to India this year to embrace the app-outsourcing boom. "The struggle people have nowadays, is that once you've developed an application for iPhone, the next thing you know is you have to do the same for Android."

PRICING EDGE

Indian developers may have the edge in pricing. MoFirst bills clients in the US, the UK and the Middle East $15 to $20 an hour, compared with the $50 to $100 charged by developers in the U.S., said Dongre, who has a mechanical engineering degree from the Indian Institute of Technology, Bombay. Applications MoFirst recently developed include Friends Aloud, an audio Facebook feed it created for a Texas-based entrepreneur, and Producteev, a task-management tool, for a New York-based client, he said. MoFirst's competition includes Qburst Technologies, which started in 2004 as a Web developer in the southern Indian town of Trivandrum. The company, which employs 400 people, may increase hiring after revenue from websites and iPhone apps jumped 76 percent to $3.18 million last year, said Manjith Kamalasanan , a business development manager at the company. 

EVOLVING INDUSTRY

Qburst has developed 150 mobile apps for customers in the UK and US. That includes an iPhone app for St. Albans, UKbased PrivateFly, which allows users to search for and book private jets; an e-commerce iPad application for Simba Toys, and an iPhone shopping search application for thefind.com. Offering cheaper software than in the US and Europe has worked in India before. Tata Consultancy Services and Infosys have grown from being back office service providers to Asia's two biggest companies by market value among providers of information-technology services, an industry Gartner estimates will grow 6.6% this year to $846 billion. While IT services still dominate the nation's technology industry, the rise of mobile-app developers signals Indian technology companies may be evolving, Gartner's Gupta said. That's what developers such as Dongre may be counting on. "Change is happening very fast in India ," said MoFirst's Dongre. "People are starting to think more about developing products."

WHY IS IT HAPPENING

Indian developers may have the edge in pricing. MoFirst bills clients in the US, the UK and the Middle East $15 to $20 an hour, compared with the $50 to $100 charged by developers in the US

WHAT ARE THE DEMAND DRIVERS .

Requests for programmers who write code for Apple's iOS platform rose 20% in the second quarter, says Elance. Demand for programmers with Android skills rose by 15%, while developer requests for Black-Berry devices increased by 3%

WHY IS IT A SECOND COMING .

Offering cheaper software than in the U.S. and Europe has worked in India before. TCS. and Infosys have grown to become Asia's two biggest IT firms

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