The Second Decade Of Offshore Outsourcing
Quite an interesting aspect of offshore outsourcing, that outsourcing may become just as natural choice as expanding business into emerging markets like China and India. The article also discusses how traditional cheap sweatshops have become strategic partners leveraging the models that they invented for themselves.
Two-thirds of companies on the InformationWeek 500 list of business technology innovators say they do offshore IT outsourcing, up from 43% in 2004. Consulting firm NeoIT estimates that 75% of the world's 2,000 largest companies are engaged in offshore outsourcing, with 20% of their IT budgets spent on offshore contracts; it predicts that could rise to as much as 40% of budgets in the coming years.
Cost cutting is usually the main driver, but as companies rely ever more on foreign markets for revenue growth, they're rethinking where they want their employees, including those in IT. For Genworth's McKay, it makes sense that globalization of the IT workforce follows globalization of the business: About 30% of the company's revenue now comes from outside the United States, and that's projected to grow to 50% by 2010. About one-fourth of InformationWeek 500 companies say they're expanding their IT operations in China, India, or another part of Asia.