Lower salaries and more training needed to slow offshore IT trend

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Lower salaries and more training needed to slow offshore IT trend

John Kavanagh
An end to "salary madness", plus more training, greater attention to quality and budgets and closer ties between IT and business departments could help the UK resist IT competition from developing countries, according to the BCS.

Companies are sending IT work overseas because costs are lower and staff in developing countries often more than match the quality of those in developed countries, the BCS said last week.

It pointed to a study by analyst firm Gartner which forecast that 10% of IT jobs in supplier firms and 5% of those in user firms will move abroad by the end of next year.

An example of one possible long-term impact has come from Jack Noble, a senior manager at IT services group EDS, who told a BCS Central London Branch meeting earlier this month that within five to 10 years, half of non-government systems work done by his company in the UK could go abroad. He said coding and development work, which he put at 40%-50% of systems effort, could go offshore.

Unfortunately for IT staff, the BCS said, the trend has gathered pace at a time of unprecedented decline in the UK IT jobs market when more than 30% of contract staff are unemployed.

But the BCS ruled out market regulation. "Market forces will prevail, but we can and must compete," it said. "We must find our unique selling points and make sure decisions are made against these points - not the competition's strengths.

"Basic wage costs are only one element, and not necessarily the most important one. As with all successful service industries, the key is to satisfy the customer better than the competition.

"Customers for IT services want effective systems they can rely on, from a low-cost, high-quality supplier, and the UK must become that supplier.

"This means most of all the very close integration of business and IT that any successful IT project has to have. How can this be achieved with the overseas outsourcing of much of IT development? The answer is that it cannot. UK IT suppliers must put quality first, get the project delivered on time and to budget, and know that it will satisfy the business need."

But at the same time, UK IT salaries are part of the reason for companies looking abroad, the BCS argued. It said rates overall will fall in the UK after what it described as the "salary madness" of the past 10 years.

This will close the cost gap between the UK and developing countries, especially as IT staff in those countries will demand salaries closer to those here, although there will still be a "substantial difference" for the foreseeable future.

The BCS statement also called for more attention to professional development of IT staff. It said the quest for quality demanded "a substantial increase in training in all aspects of IT, the certification of IT professionals' competences, and continuous professional development of individuals".

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