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IT outlook declines due to outsourcing, offshoring

News Analysis
May 31, 20042 mins
Enterprise Applications

Gartner Group last fall surveyed CIOs about the effects of outsourcing and the results are less than promising. The research firm reports that IT managers are already being expected to do more with fewer resources and that their hopes for retaining many of their IT jobs is shrinking. 

Conducted last September, the Gartner study showed that half of the more than 150 CIOs surveyed indicated their companies were going to outsource IT. Andy Rowsell-Jones, research director at Gartner, says CIOs will have to become deft at brokering deals with vendors and outsourcers such as CSC, Deloitte or EDS.

“Running many IT services has become far more transaction-based, as if it has moved from brain surgery to producing soccer balls. Software for something as complex as a global supply chain is now coming out of a box – literally,” he says.

Offshoring is also a problem for IT managers. A study for the Indian government predicts that India’s revenue from IT services will increase from $12 billion in 2003 to $62 billion in 2009, while IDC forecasts that U.S. spending on outsourcing will increase from $16 billion in 2003 to more than $46 billion by 2007. Gartner says that one in 20 IT jobs in the U.S. will be moved offshore by 2005.

In March, a bill called the Defending American Jobs Act of 2004 was introduced to Congress that will prohibit U.S. companies from getting financial aid if they do not protect local jobs and favor overseas workers instead.

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