Although outsourcing has been around as long as work specialization has existed, Information Technology Outsourcing is here to stay as an trend which has evolved, grown, matured and is not just living up to but more importantly outgrowing its potential. Especially with organizations that wish to cut costs while gaining access to world-class software engineers, it is no more an option but a wise decision. Outsourcing is in fact, an essential element of growth that enables a firm to focus on core-competency areas.Outsourcing of software development and application management is increasingly becoming a strategic necessity as companies struggle to remain competitive and profitable in uncertain economic environments. More than half of all the fortune 500 companies today target offshore software development in India. The core reason for preferring India, as an offshore development partner, to other competing destinations in offshore IT Outsourcing business is the availability of a vast pool of educated human resource combined with world-class quality offerings and ever encouraging Indian Government policies for the IT sector.