Outsourcers Undeterred by 'Backlash'

Offshore outsourcing seems to be returning to the headlines of late - DRNO reported on the call centre concerns of European consumers last week, and now a new report by the META Group says offshore outsourcing by IT firms in the US will continue to grow nearly 20% annually through 2008, despite the reservations of many Americans.

The METAspectrum(SM) report was released at META's Outsourcing 2004 Conference & Technology Showcase in San Francisco last week. By 2005/06, the report says most IT organizations will have an 'offshore' strategy, despite the current efforts of domestic vendors to position 'portfolio optimization' as an alternative global approach.

According to Dean Davison, VP at META Group, 'With global resources costing one-third to one-fifth that of American employees - without accounting for hidden costs - and having higher process discipline, offshore strategies now pervade North American IT organizations'.

Several offshore outsourcing vendors now exceed $1 billion in annual revenue, and the total market is greater than $10 billion. Immediate market growth remains in application development and maintenance (20%). META Group believes the average enterprise will ultimately (by 2008/9) outsource as much as 60% of application work offshore.

Davison says that application development and maintenance constitute c. 30% of spending for the average IT organization, and offshore 'typically reduces that expense by 30%, but introduces additional risks and challenges'. META Group found that the 'political backlash toward offshore is not deterring market adoption. Rather, public perception is another item to be managed in the process of moving offshore'.

The Group is online at www.metagroup.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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