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Offshoring backlash set to slide

The backlash against offshoring will deepen over the next few months, but will be consigned to the wastebasket of history by the...

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Outsourcing

The backlash against offshoring will deepen over the next few months, but will be consigned to the wastebasket of history by the end of 2005, according to Craig Baty, group vice-president, Gartner Group.

"Global sourcing [of IT services] is an irreversible megatrend although its true impact is yet to be felt," he said during the Regional Infocomm Conference.

"By 2006, we will see a reliable global sourcing market."

According to Gartner, the current backlash against IT offshoring in countries such as the US and Australia - based on the notion that offshoring causes IT job loss - is misguided.

According to Baty, a US government survey showed that IT offshoring accounts for less than 5% of overall US job losses. The Information Technology Association of America (ITAA) puts the immediate job loss figure at 2.8%, while at the same time saying that many other jobs are created.

The job loss debate is just a smokescreen to cover up less attractive reasons for opposing offshoring, Baty said, adding that by tthe time the offshoring market has matured, significant consolidation will have occurred.

"About 60% of offshore outsourcing companies will fail within three years," he said.

The offshoring industry will become more professional and the proportion of outsourced IT service work sent offshore will triple from between 2% and 3% now to between 7% and 10% by 2010, Baty said.

David Legard writes for IDG News Service

This was first published in June 2004

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