Business focus needed as basic IT skills move offshore, says report

IT professionals need to become more business focused, as the trend to offshore outsourcing of basic IT skills continues, a government-sponsored study has concluded.

IT professionals need to become more business focused, as the trend to offshore outsourcing of basic IT skills continues, a government-sponsored study has concluded.

Research by Ovum for the Department of Trade & Industry suggests that the number of people employed in software and IT services in the UK will drop by 15,000 – equivalent to 6% of the current workforce – by the end of 2008.

The bulk of the reductions will be among programmers, call centre and helpdesk staff, corporate administration, and other lower level technical roles.

Employers will increasingly demand IT staff with the higher-level business skills needed to translate technology into successful business projects. This will mean that both employers and IT specialists will need to take steps to update their skills.

“Our message to the companies is you need to ensure you have the skills and workforce development in place to develop those key skills,” said Phil Codling, senior analyst and service manager at Ovum.

Individuals will increasingly need to specialise in niche vertical sectors, such as insurance or investment banking, and will have to take steps to ensure they work on more customer facing projects, said ­Codling.

But action needs to be taken now to ensure that employers have the programme managers and business architects they will need over the next decade.

The report raises concerns over the falling numbers of students opting for computing and mathematics at university, and a fall in investment in training by employers.

The UK needs to urgently address the training deficit, and potentially use tax incentives to encourage formal staff development. There should also be incentives for employers to retrain UK staff whose jobs are outsourced offshore, the report said.

“If you do not have the quality of people coming in at the base of the industry, going through development, on-the-job learning and formalised training, in 10 years’ time where are our top business architects and programme managers in the UK going to come from?” said Codling.

He advised IT professionals working in the supplier industry to become much more business focused. “It is a question of making sure you get involved in projects where you are closer to customers, translating customer requirements and solutions,” he said.

Although wages for IT staff in India are increasing, Ovum predicted that offshore outsourcing would continue to expand beyond 2008, with at least 70% of today’s software and IT services roles having the potential to be outsourced offshore.

“Even with the double-digit wage inflation being seen in India, there is still a very attractive cost gap. A lot of the cost of offshoring is in the additional management overhead required and in other expenses, rather than wages,” said Codling.

“I would not necessarily say we will need far fewer IT professionals in the future, but a different type of workforce.”

Outsourcing by sector

Financial services
Major use of offshore outsourcing. Investment banks are leading the move.

Life sciences and biotechnology
A lot of potential to offshore, but building own offshore services is preferred.

Utilities and telecoms
Expected to be the next sector to take up offshore outsourcing. Growth could exceed that of financial services.

Public sector
Small projects, but no large take-up.

Source: Ovum/DTI

Read article: A third of firms will not train staff

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