Gartner: One in 20 end-user IT jobs to move offshore

By 2005, fewer than 40% of US IT workers whose jobs have been moved offshore will be "redeployed" by their exisiting employers.

The Gartner study, which is continuing, draws upon IT employment figures maintained by the Information Technology Association of America, an industry association that estimates the US IT workforce at 10.3 million people.

Gartner is still trying to determine the total number of jobs that will be moved offshore according to Gartner analyst, Fran Karamouzis.

A November 2002 report issued by analyst group Forrester Research predicted that 3.3 million US services jobs - including 472,632 IT and mathematics positions - will be sent offshore by 2015.

The challenge for Gartner is in trying to determine the total number of US IT jobs that will be affected "is that there's a level of new job creation" that has to be factored into the calculations, said Karamouzis.

"As the economy begins to improve, there may be public and legislative pressure that could impact those projections" on the number of US IT workers who are displaced by offshore outsourcing, said Craig Symons, an analyst at Giga Information Group.

Symons expects the financial services industry to lead the push among US industry sectors that shift a growing portion of their IT work to emerging markets.

Banks and financial services companies have historically "been leading the curve" when it comes to adopting new technologies and IT methodologies. Another factor is the fact that financial services firms typically spend 8% to 11% of their annual revenues on IT, as compared to 3% for most other industries, Symons added.

Symons also pointed to the increasing number of US software companies that are sending their product development work overseas.

"Some of this is being driven by standardisation - more [software] companies are writing in Java and J2EE" and suppliers are finding it easier to distribute phases of their development work to different regions, Symons said.

Maria Schafer, an analyst at Meta Group, agreed with Gartner's estimates that the number of jobs sent overseas by US IT suppliers and services providers "may well be near 10% by the end of next year."

However, she said she thinks Gartner's estimate that 5% of IT jobs at end-user companies will be sent overseas by the end of 2004 "is wildly high".

Moving jobs offshore "takes a lot of different pieces coming together, not least of which is an organisation strategy and plan, an available workforce and most importantly, transition time," said Schafer. "It takes a lot of effort to manage remotely what you've up to now managed [and not necessarily well] locally."