Kamar: Actually Brian, over the last several years Quark has transformed itself from being an American company into one that is truly international. We now develop software products in over 20 languages and our international sales far exceed those in the United States. We would not have been able to accomplish this without the help of a large number of qualified software engineers – professionals that are in short supply in America. We originally sought out such individuals in their home countries and brought them back to the United Sates to work. Over time, however, we became uncomfortable with this practice of stealing the best and brightest minds from developing countries. We have now established software engineering centres in these regions. So in our case, the primary motivator behind this "offshore" move was not cost savings, but the availability of a skilled workforce.

Question: Why did Quark set up subsidiaries rather than sub-contracting software houses which already existed in these countries to do the R&D work?

Kamar: Most companies using sub-contracting regard information technology as a support function and not their primary line of business. For an independent software vendor such as Quark, software is the core business. As such, we cannot outsource such a strategic function. For us it is essential that this function remain in-house, even if in-house involves teams working many thousands of miles and many time zones apart.

Question: Is this the Quark view of the world, or is it pretty well standard for the software development industry.

Kamar: I think you will find that most product-oriented software companies conduct the majority of their development internally. They may sub-contract smaller components to organizations specializing in a certain technology, or perhaps outsource ongoing maintenance of an older code base.

Question: But sub-contracting software companies in developing countries are a standard feature of the digital economy. In fact, such activity has become a major export earner for India and several other developing countries.

Kamar: Sure, this is an extremely important and evolving component in today’s digital economy. Traditionally, this type of information technology sub-contracting has consisted of maintenance and support, customized development, and professional consulting services. Recent efforts to get involved in product engineering have primarily had a domestic or regional focus. Hopefully in the future, as skill levels advance, these countries will be able to develop software products for the global marketplace.

Question: And what selection criteria do international companies use when selecting sub-contractors or software development partners?

Kamar: Generally the criteria are the same as for any other type of export activity. The importing companies look at two primary factors – cost and quality. The other important factor in the case of software companies is the ability to deliver on schedule.

Question: What about countries other than Singapore and India? Do you see any scope for these countries in the software export business?

Kamar: Sure. There are several countries in Eastern Europe and Asia that have already displayed capabilities or are making headway in this area. It takes only a limited amount of capital investment to set up a software operation. China has an extremely large pool of qualified talent. The advantage that the workers in Commonwealth countries such as India have is their ability to communicate in English.

Question: So what's the secret to a successful working relationship in the software industry between head office and offshore subsidiaries or sub-contractors?

Kamar: In my opinion the most important factor is good communication. Software development is a somewhat long and arduous process that requires constant communication between workers. This communication becomes even more important when team members are working in disparate locations. After all, you want to make sure that the end-result of your efforts matches what was defined in the system specifications – that you do not end up with an orange when you had envisioned an apple.

Question: And if you were a national strategy-maker in a developing country intent on developing a strategy that would stimulate the development of such relationships and, in the longer term, create indigenous software development export capability, what would be you principal areas of focus?