An average of 41% of new development activity is now
outsourced, according to Meta Group.
Last year, the average percentage of new development from
outsourcing providers and external contractors was 35.9%
worldwide.
Despite political instabilities in India and other parts of the
world, more and more companies realise the strategic and financial
advantages of using offshore resources for both programming and
business processes, according to new findings from Meta’s upcoming
2004 Worldwide ICT Benchmark Report, which looks at ICT trends in
various industries across the globe.
“ICT budget cutbacks have left ICT managers little choice but to
outsource if they are to get their development projects completed,”
says Meta executive vice-president, Dr. Howard Rubin.
“ICT organisations often use external resources - such as
consultants, contractors, packaged solutions, and outsourcing
providers -- to augment, and sometimes replace, internal resources.
Going offshore, and using the economics of offshore outsourcing,
have been the only competitive options left for larger companies
since all the ICT budget decreases of 2000, 2001, 2002, and even
2003,” he adds.
Offshore outsourcing is definitely up, as offshore companies
mature, providing cost-effective and high-quality services. These
companies have found methods for mitigating risk, and have compiled
a substantial list of strong customer testimonials.
India continues to be the preferred offshore country, with more
than 500,000 knowledge workers, but other countries are competing
-Russia, the Philippines, Ireland, Israel, and China are the
up-and-comers to watch.
Turnover rates for ICT staff are decreasing both in the US and
worldwide. US turnover is at 8.1%, down from 11.8%; worldwide
turnover is at 8.2%, down from 11.7% last year - such rates are to
be expected when hiring is down, because those who have managed to
hold on to their jobs do not quit when the job market is
depressed.
Not surprisingly, India, the preferred offshore outsourcing
country, is also the country with the highest turnover rate; Canada
has the lowest turnover rate.
“There is no doubt that 2003 has been a terrible year for ICT
workers,” said Rubin. “Staff cutbacks and the unavailability of new
positions have sent many ICT professionals looking for new career
options. However, there seems to be better news on the horizon for
2004 -- we have noticed a recent increase in internal hiring, which
could be an early sign of a slow economic recovery.”