International Product Life Cycle for Software

I was surprised to learn how many executives do not understand international product life cycle as it applies to software products. This short description is intended to describe international product life cycle in an abreviated fashion and then discuss how software's portability make it a unique case which promotes more rapid off shoring.

First, international product life cycle states that innovation starts in a home developed country and becomes successful as a product. Then it competes in other developed countries with products from within these countries. As the technology matures, it moves into the developing world by means of export. Then the developing world starts manufacturing for home use and eventually manufactures and sells back into the developed countries.

There are many examples of this. It transpires because of the dynamics of the theory of comparitive advantage as it occurs over time.

For software, the twists are the following:

a) It is much easier to move production off shore to reduce costs associated with add ons. For this reason this happens relatively early.

b) Because the knowledge associated with developing add on products and services allows the developing country to develop the same or better skllls as the parent, often the entire product or idea can be copied to provide a much lower cost version off shore sooner rather than later. If the product enhancement is done as a branch of the parent company, IP is protected. If the enhancement is done to an outsourcing company, it is very likely that the company is creating a vehicle to copy it's product.

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