IT outsourcing is exaggerated
Just red IT offshoring is exaggerated and the IT labor shortage is real by Jason Hiner, a very interesting perspective that should both appease local IT professionals and offshore providers: “…new evidence shows that the IT offshoring trend is greatly exaggerated. The Society of Information Management’s 2008 IT Trends Survey shows that IT leaders are planning to increase offshore outsourcing in 2009, after two straight years of declines. Nevertheless, even with the increase, offshore outsourcing only represents five percent of projected 2009 budgets, and CIOs say they are still having trouble finding enough domestic IT workers with the right mix of skills to fill the open positions that they are keeping at home.” The article of course spawned a bunch of negative comments as any realistic, positive or pragmatic view on offshore would. I find it very insightful and very much in line with my observations of the market.
This discussion is bound to continue for a while, here is another interesting article / reaction to Hiner’s article: Offshore Threat to IT Jobs: Overblown or on the Money?
CIO.com Perspective on Offshore Risk Management
A very good article on CIO.com – Offshore Outsourcing: A Risk Management Perspective. It offers a high level perspective on risks of offshore outsourcing with specific look into several dimensions -
- Geopolitical
- Cultural
- Contractual
- Operations
- Compliance
- Business Continuity
The article also gives some high level approach to risk mitigation. These risks as well as methods of dealing with those are most relevant to large outsourcing contracts and companies but should be considered even by small companies which in some cases could slide in between the items of that caliber.
IT Budgets Will Go Up Or Stay Flat For ’09
An interesting article in InformationWeek. The title is pretty bold and encouraging: IT Budgets Will Go Up Or Stay Flat For Most Companies In 2009. Looking outside from my window following the market indices I find it difficult to believe, but I certainly hope so. It would be nice to put the gloom and doom behind.
An interesting question here; will that translates to the same in budgets for offshore outsourcing? Most likely yes. The outsourcing market is fairly established and correlate well with spending in IT arena. The supply / demand balance of IT talent has not changed drastically and solid IT resources will remain one of the scarcest commodities.
On the other hand at the same time we hear that Wipro delays plan to open software center in Atlanta what is attributed to economic downturn.
So I guess we are still left to wonder what role will the recession play in offshore outsourcing? By the way, a great article on CIO.com Offshore Outsourcing: What Role Will the Recession Play?
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IT Outsourcing ’09 Predictions
Hip hip hooray, the crystal ball is unveiled, and early predictions for offhshoring are out – IT Offshore Outsourcing: Early Predictions for 2009. Looks like there will be more business coming to the offshore vendors despite all the economic turmoil. I bet the jury is still out, as a matter of fact, the survey of 230 CIOs must have taken some time to process and summarize. The figures we are seeing today (DOW at 7500) are based on the data which probably goes back at least a few months (when DOW was let’s say at 12000).
My predictions are on a negative side, nowadays more than before, I expect notable deflation of offshoring business that will hit hard small suppliers in particular. I am sure we’ll see a wave of unpaid invoices, team buy-backs, and price wars.
Finding local employees may become easier as well, and that’s has been one of strong offshore drivers. Especially considering that things are getting quite gloom and doom even in the IT employment heaven: California’s unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years, just as a state fund that pays unemployment benefits was about to run out of money…
November 21, 2008 Posted by Nick Krym | News, Articles, Thoughts and Comments | Offshore Current Affairs | Leave a Comment