By Andy McCue, 17 March 2004 12:10
NEWS A quarter of traditional IT jobs in Western countries will move to offshore locations such as India by 2010 as the global outsourcing trend continues to boom, according to the latest figures from Gartner.
The research shows that outsourcing as a whole is outstripping the IT services market in Europe, growing by 3.1 per cent in 2004 and predicted to rise to 8 per cent by 2007, with the offshore element tipped to grow hugely. Gartner predicts almost a third of leading European businesses will include an offshore element in their IT plans by 2005.
As a result of this shift of IT services overseas, jobs will inevitably follow and up to 25 per cent of Western IT jobs could go to the emerging markets by 2010. But Roger Cox, managing VP at Gartner, said the alarming nature of that headline figure masks the true story.
"That 25 per cent is over a long period of time," he said. "And if we turn back to a period of growth then you'll find those jobs could go entirely into growth," he told silicon.com.
On another negative note, Gartner claims that 2004 will see the first major offshoring failure that will lead to a company taking its operations back onshore. Cox said this won't necessarily reflect the bigger picture and has more to do with the politics of offshoring, which will see the backlash against white collar job loss continue during the year.
"Because it is being hyped up, it has become very political, so any failure will be more visible," he said.
Cox said offshoring has already proved itself as a mainstream IT business decision but warned against companies looking to use the model to make quick cost savings.
"The first thing is to get that business alignment right," he said. "If companies are only looking at price and levels of service, they are going to drive it off the rails."
In terms of favoured offshore locations, India still dominates, with China and Russia trying to break through as genuine alternatives for European companies. Gartner also predicts that the new countries joining the European Union in May will become popular for 'nearshore' outsourcing of some operations, although not on the sort of scale that will pose a threat to India.
Comments
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1. Nick Ford
This will mean the destruction of the UK IT market and a hugh loss of jobs. Gartner have got wrong. Growth will be absorbed by these countries as well and we will become a backwater with very few IT jobs avaiabable. Businesses are unwilling even now to train people. They are looking at a cost saving and that's all.
What about data-protection? I gave no permission for anyone to read records about me in another country.
Maybe if people started to refuse banks to allow their records to leave the country that would help.
Ther will be nothing but tears over this. The only reason businesses move abroad is to save money on wages, health & safety and other environmental restictions that abound in our societies. If they had to meet the same criteria abroad they wouldn't move. So don't be fooled by all this rubbish put out about how it actually helps our economy it doesn't. The real idea is to force the same conditions to prevail in this country as this is the only way we will compete with offshore competition.
2. Dick Willis
In terms of buying IT solutions we take account of total cost of ownership. Offshoring needs to take account of total cost of implementation. Shipping those jobs overseas will leave fewer people back home with the money to buy the services on which the offshoring industries rely.
3. Dick Willis
In terms of buying IT solutions we take account of total cost of ownership. Offshoring needs to take account of total cost of implementation. Shipping those jobs overseas will leave fewer people back home with the money to buy the services on which the offshoring industries rely.
4. Dana Baldwin
Many jobs will come back to lower income areas in the US as offshoring problems arise. Companies like Kathy Brittan White's Rural Sourcing are well positioned to take advantage of this trend.
5. Ani Srikantiah
This offshoring is definetely going to be failure when the guys who outsource find out that Software development is about creativity and creativity is not so abundant in india or is not the preserve of india . so the thought of saving money will result in low quality and failure of projects. Creative and talented techies/developers need not worry . a premium will be paid on that wherever they are in the world and this is god given and cannot be replaced by training. take it from me i have been in IT development for 10 years and know what distinguishes a good developer from a mediocare one.