Benefits April 6, 2005

Research: IT Outsourcing to Balloon by 2015

April 6, 2005 (PLANSPONSOR.com) - The number of IT jobs outsourced to countries such as India and China is expected to skyrocket from the current 5% to an estimated 30% by 2015, according to a new report.
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According to a TechwebNews.com story, research firm Gartner reported that the shift – despite its size – will still not mean a net loss of US IT positions. ” There are a lot of people who are currently programmers who could transition to higher-level positions where you need to be close to the customer,” Gartner analyst Frances Karamouzis, the research report author, told TechwebNews.com. Karamouzis labeled the expected outsourcing change “a tectonic shift.”

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Other observers have predicted a similar IT outsourcing trend but believe the process will take longer, according to the story. Cindy Shaw, an analyst at Moors & Cabot, said she believes 30% of IT jobs will ultimately move offshore. Last year, Forrester Research analyst John McCarthy said 3.4 million US services jobs – -including a number of IT-related positions –would move offshore by 2015.

The rush to send IT work offshore also will result in an outflow of cash from the United States and other Western countries over the next five years, Gartner reported. Worldwide spending on offshore research and development and engineering will increase by a whopping 860%, from $1.25 billion in 2004 to as much as $12 billion in 2010, Gartner reported.

Also according to the research firm:

  • offshore spending on infrastructure outsourcing will grow from between $100 million and $250 million to between $3 billion and $4 billion over the same period
  • offshore spending on application-development services will more than double from $23 billion to as much as $50 billion.

Yet automation and productivity gains – not offshore outsourcing – are still seen as the greatest threat to IT jobs in the West, Karamouzis said. She predicted the effect of those factors on IT job displacement will be six times greater than the impact of offshoring by 2015.

Multinationals could also soon be looking to emerging markets for CIOs and even CEOs, Karamouzis reported. Gartner predicted that by 2015, 30% of the world’s top CEOs will be from countries other than the United States.

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