2010 is a pivotal year for software companies to examine their globalization strategies. The axis of globalization is starting to shift from Western to Asian markets, choice abounds and the very nature of product development is changing. Increasingly companies need to tap into the best expertise and the best cost efficiency globally to compete effectively.

Innovation outsourcing can help companies face market shifts and play a pivotal role in globalization software success.

What Globalization Means to Software Companies Today
There are two important areas software companies need to focus on where we see major shifts. The first is the globalization of markets. In the past three decades of software, it has primarily been a US-dominated software market. As such, most software companies built software products for the US, and then localized them for different international markets. But today, markets around the world have gotten much more sophisticated, and there are a lot more choices for buyers in every category of software technology -- whether enterprise software, web applications, or mobile software. The axis of globalization is also starting to shift from being focused primarily on Western markets to Asian markets especially with the rise of China and Korea as maturing markets for global software technologies. Simply taking a US-centric software product and then localizing it for another market just isn't good enough anymore. Increasingly, the largest technology leaders of the world are establishing multiple R&D sites around the world.

A second area of globalization focus has to do with how software products are produced. It used to be US-centric products would be localized to be sold everywhere else in the world. Now you are seeing the rise of locally designed and produced software tailor-made for target markets. An example of this is how Android has been heavily tailored for the China market by China Mobile and other Chinese partners to the point where they have named it the OPhone. The OPhone runs OMS (Open Mobile System), a China Mobile-branded fork of Google's Android for use on China Mobile's proprietary TD-SCDMA 3G network (incidentally, also a homegrown 3G standard). Dell, HTC, and Lenovo already have new phones based on OPhone, and Samsung, LG, ZTE, and Motorola are all expected to support the platform as well. The definite trend going forward is leaving a lot more room in products to accommodate market-specific innovations and customizations.

Benefits of Globalization
Globalization can enhance both the top line and the cost line of your business. There are very few investments that can add to both growth and save on costs the way globalization can. Globalization can be seen from both a market and an engineering perspective. And starting with one generally leads to another. For example, if a company started off establishing an offshore development team in China, they now have a base of product specialists who have some level of expertise in that company's product and value proposition. It becomes quite natural to layer over that offshore development team a smaller team of market and sales specialists that can develop the market potential for China and the rest of Asia from that initial core offshore development team. At least half of our clients are using this strategy quite successfully - starting with offshore development and then evolving that team into market development. The cost savings center starts to generate new sales for you, and you get the bottom-line benefit first, and the top line growth comes after that. It also works the other way around, but the ROI for getting top line growth takes longer than the quick ROI benefit for setting-up an offshore development team.

Innovation Outsourcing without Borders
The nature of product development is changing, and increasingly companies need to tap into the best expertise and the best cost efficiency globally - which is what we mean when we talk about innovation outsourcing without borders. This can very quickly become a complex process for companies to manage. We have products that are being built for our clients across three development centers in three continents, and that's because the expertise to build the best UI (User Interface), and the best applications, and the best system software and hardware design are located in different areas around the world. We are able to provide our clients with globally sourced expertise and cutting-edge innovation, but with a very simple single point of contact around the world. If our client so chooses, they can always work with a local team that takes all the complexity out of "follow-the-sun" product engineering. Here at Symbio, our clients leverage the scalability, cost efficiency, and engineering firepower of global teams across 22 locations around the world, but with the simplicity of working with a local partner who knows their business and the way their company works.

Innovation outsourcing is about working with a partner who can help you build products that are differentiated and win in the marketplace. Companies that can tap into the best domain expertise and technology specialists in the world to design and make enhancements their products, and then implement those designs and enhancements using the most cost-efficient, scalable, and extensible product development processes across the globe are the ones who will succeed in today's market.

The biggest danger in innovation outsourcing is not putting enough effort into the front-end engagement planning process. There are no silver bullets in outsourcing, and success comes from mutual trust and planning.

The short-term measures are... Have we saved money? Has the quality of deliverables gotten better? Have we shipped faster than before? But more strategically, the measurable impact comes over the longer term (1 to 3 years)... Have we been able to produce innovations that are creating new sales in the marketplace. Are the products that we built together with our outsourcing partner differentiated and winning in the markets we sell in?

The Future of Globalization
The pace of change for a technology company is only going to get faster and faster. Product lifecycles are shrinking, and as such, companies are going to need to be even more agile than before. However, by working with the right partners, these companies will be a lot more agile because they won't be locked into the same economies of scale issues as before. In the old days, if you were a Web company, it would be unthinkable to move over and create a mobile phone. But today, that is exactly what is happening, and companies are able to reconfigure and retune their product portfolios and business models quickly by working with a trusted outsourcing partner. I also believe that five years from now, we will see the rise of "engineering-free" software R&D and design houses, just like the rise of fabless semiconductor design houses. When that happens, you are going to see the next golden age of software innovation when any software idea or design can be quickly built and brought to market with just a fraction of the old R&D investment required.

The most successful companies are going to be the ones who can reinvent themselves continually. Successful companies are only limited by their intellectual and creative bandwidth. And with the right innovation outsourcing partner - the world's best technology expertise, greatest engineering scale and cost economies can be realized for a winning strategy.

Jacob Hsu is CEO of Symbio.