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rofit overseas. Technology, as intangible assets can be easily transferring from one place to another, which is one of the factors that software development industry can be so mobile.

Internalization advantages on the other hand, refer to the internalization of the firm that allows its product to be exported at ‘arm’s length’ or technology being licensed. One obvious example of internalization is vertical integration, where the firms decided to control the input side or the output side of its product chain. In this way the different stages of production are transferred to the location where it is possible for most productively and with cheap costs for the factors of production. Technology industries such as software developments are at risk of being ‘brain drain’, and internalization could help to retain the use of technologies within their own boundaries. Also, firms that require programming or R&D could vertically integrate to other countries that have higher ‘skilled workers to cost’ ratio. (Kostov, 2011)

To explain further, the owner ships of some specific products or technology may create barriers to competition, and the advantages are not solely based on procession but also the ability and willingness to internalize the use of these assets. Firms can exploit this advantage through foreign direct investment and internalized the cross broader transactions effectively, the ability to control over the quality and technology diffusions and asymmetric information. For the software industries, this is specifically one of the main reasons for multi-nationalization of outsourcing and offshoring.

Offshoring, differentiates outsourcing as it sets up its own business other than contracting to external organizations, and allow better use of leverage cost advantage. However, it contains risks such as geographical risk, cultural difference and communication problems. Also, capital may be easily transferred from one country to another; however the mobility of labour is restricted. The software development industry however, due to its working nature makes it highly mobile.

The hyper mobility of software development refers to the fact that everywhere in the world could be a possible site for its business. There are computers and intelligence all over the world, where software development firms are given many options as to where to set up their business; if a country is too expensive, find another; if they don’t do a good job, get rid of them. The software industries are also benefited when offshoring as it allows them to set up a nonstop working hours. (Kanakaratnam, 2012)

24 hours software development is possible as workers from the offshore can pick up where the home country left off and take the shift to the computing jobs. The cost nature of the ‘production’ of software development is another major driver for offshoring - there is virtually no manufacturing cost for programs. To remain competitive, firms would constantly search for skilled workers with cheaper labour costs at other countries.

In conclusion, there are many incentives for firms to carry out foreign direct investment. The assumption that firms would seek to move their production of goods and services to other countries with lower wage cost could be rationale by the advantages they can acquire through offshoring and foreign direct investments. These advantages include locational advantages