.‘‘I've been really surprised by the type and quality of services on offer here, which are not low cost but are difficult to access in Ireland,” she said.

‘‘There are other issues as important as costing, for example, the speed you can get products to the market, the facilities for testing software or your capacity to provide after sales services.”

The ISA signed a memorandum of understanding with its Indian counterpart, Nasscom, last week, which aims to create more joint ventures between firms from the two countries.

Nasscom chairman Kiran Karnik said he believed there was tremendous scope for joint product development and he saw ventures between Irish and Indian businesses as a good fit.

‘‘ Ireland is producing sophisticated software for worldwide markets. But you are constrained by the size of your human resource pool,” he said.

‘‘The actual work of developing products could be done more in India because we have the numbers to do it and the ability to keep costs down. The architecture and design could be done in Ireland .”

India produces about 400,000 engineering graduates each year.

Tapping into that labour pool while minimising the risks of dealing with intricate Indian bureaucracy, inflexible banking services and rigid employment laws can be daunting for small companies.

‘‘The only real way in is through good domestic partnerships,” said Jennifer Condon, who is responsible for advising companies for Enterprise Ireland on opportunities in the software sector.

‘‘Until recently Irish companies would have found it hard to build relationships with giants like Infosys but now middle-ranking companies are emerging.”

Joint ventures with Indian firms can provide a platform for selling products into the Indian and Asian markets, as well as reducing costs by more than 30 per cent.

Astec Global Consultancy, a former subsidiary of Eircom which provides telecom and IT services to governments and private companies, signed a joint venture agreement last week with a company in Bangalore .

‘‘There are huge opportunities at the moment,” said Cliff Anderson, director of Astec, which has about 60 mostly contract staff and sales of just under €3 million. The joint venture will be based in Ireland and 50 per cent owned by Astec's Bangalore partners.

‘‘The idea is for our partners to be a hub for Indian companies in the same way as we operate as a hub in the European market,” said Anderson .

In the long run, he plans to mix the workforces on both sides of the venture.

‘‘We'd like to bring some Indians in to do development work in Dublin and also bring Irish expertise out here,” he said.

‘‘As Ireland moves up the food chain, we need more developers, new software people and, at the moment, we can't get them in Ireland , so we have to look to the markets where they are.”

Access to India 's rapidly growing economy is another factor prompting software companies to look for local partners.

With the recent opening up of research and development in pharmaceuticals, made possible by new patenting laws, the industry is fuelling demand for added services.

‘‘The market is growing by 40 to 50 per cent,” said Alex Campbell, a spokesman for the Cork company Qumas, which develops software for the financial services and life sciences industries.

Following a series of meetings set up by Enterprise Ireland , the company decided to appoint a representative in India to resell its product.

‘‘Initially, we were only thinking about India but then we found the partner company had good networks across Asia , as far as Japan ,” he said.

He said the company which has a turnover of $20 million, expected to record sales of €1 from its Asian operations in its first year.

However, there are pitfalls in terms of infrastructure and business culture which newcomers to India may not spot at first.

‘‘Although India is called an English-speaking marketplace, that is a bit of a misnomer,” said Condon, explaining that command of English among Indian people could be poor or non-existent in some areas.

‘‘You can also have issues with recruitment,” she said.

Indian labour laws are highly rigid and require firms with more than 100 workers to apply to authorities for approval to make redundancies.

Cultural differences can also present a challenge as in other Asian countries. '‘It's very difficult for people to tell you bad news,” said Alex Campbell.

‘‘Sometimes that means you don't hear that something has gone wrong until it's too late, so you have to check often on the work and break it up into smaller units with shorter deadlines.”

Wary of cultural difficulties and of Indian bureaucracy, many firms choose to go through a Western intermediary if one is available at a reasonable cost.

A Danish firm, Kring Technologies was set up in the high-tech Delhi suburb of Gurgaon to provide this kind of service with a mix of Indian and Western prices.

The company employs almost 100 staff, about a tenth of whom are European.

‘‘There's often a mismatch of communication with outsourcing to India ,” said Micheal Sauer, a former venture capitalist, who merged his Indian company with Copenhagen-based Kring Technologies in 2002.

‘‘That's where we come in, as an interface. If I had to choose between an Indian or a Western programmer, I would pick the Indian one. They write flawless code and work very hard,” he said.

‘‘But I would not expect him to have the same understanding of the business needs behind the software.”