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Where are the hot spots for offshore outsourcing?
Offshore outsourcing: Like it or loathe it, the ability to get the same work done for less money by overseas workers is likely to be a big draw for U.S. corporations struggling to remain competitive.
The recent news that IBM executives met to discuss shipping IT jobs overseas has generated controversy. But IBM is just one of a score of organizations that have discussed offshore outsourcing options. According to Gartner, by 2004 more than 80% of all U.S. companies will have considered shifting U.S. IT jobs overseas, while 40% of all U.S. organizations will have completed some type of pilot or will source IT services from non-U.S.-based service providers.
In addition to the cost benefits, shunting tasks such as programming and application migration to foreign lands frees up in-house staff to work on more strategic developments.
As offshore service providers get more experienced at dealing with U.S. corporations, they are beginning to move up the value chain to offer business process outsourcing, call center outsourcing and network infrastructure management.
Countries such as Canada, India and the Philippines are good locations for service providers offering network management outsourcing, says Debashish Sinha, principal analyst of IT services and sourcing at Gartner. Those regions offer large pools of highly trained workers, have a modern telecom infrastructure and are likely to be able to make the required capital investment in building network management centers.
"The Philippines is an archipelago that has high-speed underseas telecom cables between the islands right up to the management centers," Sinha notes, in comparison to continental regions that might rely on older, domestic pipes.
On the other hand, countries that don't have an expansive pool of workers or can't afford big capital investments instead often concentrate in niche areas. Russia, for instance, offers scientists and mathematicians who can help solve large-scale, complex technical problems. There, an average developer salary is about $7,500 per year, according to Gartner.
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