Study: 1 in 4 IT Jobs to Be Offshore by 2010


Plenty of companies have reasonable qualms about their offshore outsourcing initiatives, but make no mistake: offshoring is alive and well.

In two years, 25 percent of all IT jobs will be located outside the U.S. That's one of the more compelling findings in the Hackett Group's new (and not publicly available) study.

A total of more than 350,000 jobs in finance, HR, information technology and procurement will be farmed out overseas over the next two years, according to the study. About half will come in IT.

And businesses are seeing substantial benefits. Hackett says that by 2010, a typical Global 1000 firm will see annual general/administrative cost savings of more than $28 million, thanks to globalization.

But the economy still stinks, and those job cuts everyone feared are in the works. Hackett says almost one-third of companies polled say they've enacted a combination of hiring freezes and cutbacks in IT, the most-hard hit area overall.

I'll have more on the study in the next few days.

In the meantime, what is your company doing about offshoring? Increasing? Decreasing? Holding firm?

And is your firm seeing cutbacks or freezes? If so, which IT roles are being affected most?


35 Comments for "Study: 1 in 4 IT Jobs to Be Offshore by 2010"

  • MillerTime February 23, 2009 1:24 pm

    It is evident that outsourcing has been increasing in popularity and there is nothing that can be done to stop it from happening. The main objective of any and all businesses is to increase profits and overall revenue. Outsourcing saves LOTS of money for these businesses by cutting costs. It is important for everyone to realize that we are no longer competing with people in the U.S. for jobs. We are now competing on a global scale. The best thing that we can do for ourselves is make our services more valuable, that means working harder than before to keep ourselves ahead of the competition, not just those in the U.S. but the entire globe.

  • rg January 03, 2009 1:17 pm

    I have never been a fan of unions, but the more careers (they are more than just jobs) are sent overseas, the more the U.S. suffers. There was a push for an IT workers' union awhile back. I may have changed my opinion in having a collective group working to save our livelihood.

  • WR Thornton December 26, 2008 9:32 pm

    At my firm, some groups are actually bringing software development work back onshore and using a combination of in-house talent and onshore, on-site (non-H-1B) contractors. Some other groups are clinging to the desperate illusion that offshore development is better, faster & cheaper, despite a staggering pile of evidence to the contrary within our firm. Our experience shows that some software development work can be successfully performed offshore IF -- and only if -- 99.8% of the ambiguity is removed and ultra-tight specifications are written and an air-tight process for verifying and validating offshore work on a very frequent basis is institutionalized. By the time these costs are added to the "cheap hourly rates" from India, Vietnam, Eastern Europe, etc., the effective difference is very little and delivery risk is increased. We're finding that, in many cases, a well-run, agile-like software development project yields **higher quality the first time** at total costs comparable to using offshore development staff.

  • JackBeNimble December 26, 2008 12:53 am

    I'm not happy about this at all. The bean counters love the cheap rates they pay for offshore work, but they're getting sold a bill of goods. I've been working with Malaysian, Phillipine and Indian offshore software development teams over the past year and I am not impressed. The staff is very inexperienced and do not possess the skills that were touted. Project planning is falling apart, the work product is poorly done and does not meet requirements. I'm doing the best I can to keep the projects moving and thank goodness I am not in the position of having to take a hit when the deadlines aren't met. The offshore teams consist of the ones who did not have the language skills or technical skills to get H-1B visas -- communication is torture. Much of the time I will suggest ways to code some logic, see the badly interpreted result, re-write it myself and email it to them, hoping they will correctly place it back where it should go without mucking it up again. I do this tactfully and show respect for the individuals and and am definitely not making enemies. My boss is so committed to the concept that I cannot complain without risking my own job -- I don't know if it's a bonus he's getting or if he's getting bribes but I'm pretty sure there's significant money in it for him; conspicuous consumption is occurring. The situation is very wrong -- my employer will not hire U.S. entry-level staff, but I'm dealing with some of the greenest staff I've ever worked with in these offshore teams. The work will go on, the deadlines will be missed and the organization will take a financial hit where the staff will be cut in order to make the budget and the customers move to the U.S. competitors who are staffing up with my former coworkers. Maybe this is OK -- the circle of life, so to speak. I just need to find the next landing spot.

  • Susan December 25, 2008 8:01 am

    PhoenixUSA wrote: "Oh last -- if you increase H-1B visas instead of offshoring, you can recoup some of the money back. The H-1B Visa holders have to pay taxes, FICA, etc. and they get to spend most of their money in the US -- thus the loss is not as great as when you actually offshore" This is a bogus agrument that has been debunked over and over. The H-1B visa is used to facilitate offshoring. The business model of the largest H-1B outsourcers such as Wipro is to bring in an H-1B who learns from the U.S. workforce how the business is run, then offshore the entire operation later. This results in a net loss of many highly skilled U.S. jobs. If you don't believe, just look at the many Indian websites advertising BPO (business process outsourcing).

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