Tech Pros Get Ready: We've Only Seen Tip Of Outsourcing Iceberg

[OhioChick]

Jan 23, 2007 at 11:22 AM ET


In the United States, there's been much hue and cry about the thousands of tech jobs that have been offshored to India over the past couple of years. But viewed in football terms, outsourcing is only in the first five minutes of the first quarter. Get ready for tens of thousands more American IT jobs to head overseas in the next few years.

To fully understand this trend, it's important to get a clear picture of where things currently stand. Outsourcing has been such a hot-button issue that there's a general feeling out there that any job that can be outsourced already has been. Nothing could be further from the truth.

Yes, Indian outsourcers like TCS, Wipro, and Infosys are enjoying torrid growth rates--routinely posting year-over-year quarterly revenue gains in the range of 40% to 50%. But, to date, these firms have captured only a miniscule portion of the IT services market. According to research firm Technology Partners International, all Indian vendors combined owned just 6% of the market in 2006. They've got a lot of room to grow.

Additionally, respondents to a recent Merrill Lynch survey of CIOs said that, on average, only 1.9% of their outsourcing budgets are spent on offshore services. The point is, the bark over offshore outsourcing has been a lot worse than the bite--so far.


http://www.informationweek.com/blog/main/archives/2007/01/tech_pros_get_r.html


<snip> Beyond the numbers and surveys, there's anecdotal evidence that CIOs are now looking to place offshore parts of their operations that so far have been largely immune to outsourcing. Specifically, I'm talking about infrastructure management. The thinking until now was that provisioning and maintaining servers and other hardware required on-site personnel. But technological innovation and cheap bandwidth have changed that.

[HughBeaumont]

1. That should be EVERY pro.

Tech isn't the only sector that's going to be affected by this Republican practice, although that profession will make up a huge chunk of job offshoring profit. It amazes me how even some Democrats understate this as an issue.

[OhioChick]

3. ...

"It amazes me how even some Democrats understate this as an issue."

You're not the only one amazed.

[cdsilv]

2. My brother is in India right now researching IT outsourcing for.....

....a large 'home equipment' company. He's going to 3 cities in India. He's an IT pro like
me, and is just doing what he is told...

[Lithos]

4. Except

India is running out of IT professionals which has caused a dramatic increase in pay rates to those qualified people. The net effect is a closing of the salary gap between the US and India which when added to the costs of increased program management oversight and process changes and business adaption/cultural shifts to support the overseas development and loss of quality due to distance is causing many CIO's to relook this situation.

The cost savings is at best illusory with some cases actually proving more expensive due to the increased overhead and lack of agility.

Information Week is just a PR rag these days and frequently behind the curve.

On Edit: Meaning, WIPRO, TCS and the other companies are now paying to have a positive spin on everything just like MS and Oracle and everyone else.