National Software Strategy for Scotland : The Strategic Options

Option 2: “Become Low Cost”

The high transportability of software products and the evolution of engineering quality practices in the production of software has led to the potential for lowest cost producer advantages in some localities. The instance of increasing software production in India and Pakistan is a well known case in point. In addition, some very remote localities are able to offer a very high quality of life - normally associated with holiday resorts - to software engineers (for example, the Electronic Commerce software projects in the Balearic Islands).

For its own part, Scotland has both labour-cost and quality of life advantages over selected software regions in the UK and the rest of Europe. However, these cost advantages - though significant - are much less than those offered by countries with less-developed economies. Major international companies that have satellite offices in India and Pakistan are able to draw staff from a pool of 96,000 new computer graduates each year. New recruits earn an average monthly salary of £145.

As such, whilst Scotland has labour cost and quality of life advantages within a Western European context, the increasingly global nature of software means that establishing itself as a low cost producer is not an attractive or indeed feasible strategy.