Gartner: Economic Woes Will Increase Offshoring
- By Becky Nagel
- April 30, 2008
Research firm Gartner is predicting that the current economic downturn in the United States will mean that more IT and development positions will go overseas.
In a summary of the report, "Offshoring IT Services Can Cut Costs: Options for a Potential Economic Downturn," Gartner analyst and Vice President Allie Young commented, "In the best case scenario [a short-term downturn], buyers will aggressively seek cost-saving measures by accelerating offshore delivery or, for first time users, moving IT services to offshore locations."
In the case of an extended downturn, Young predicted that "buyers will aggressively move toward offshore destinations and service providers that can offer a global delivery model to access lower-cost IT labor for routine IT work that must continue for the business to operate."
Another Gartner analyst, Arup Roy, agreed, saying that "Organizations are likely to conclude that increasing the proportion of work to offshore locations is the best way to reduce labor costs, among other benefits."
"In most sectors, the watchword is caution," Roy continued. "IT budgets have not yet been cut, and offshore services options are being considered or accelerated as a prudent step to contain labor costs."
The study was released by the India-based arm of Gartner last month. It indicated that India will most likely continue to be a lead choice for outsourced services, despite "the recent appreciation of the Indian rupee and rising wage rates."
The study is available here.
Becky Nagel is the vice president of Web & Digital Strategy for 1105's Converge360 Group, where she oversees the front-end Web team and deals with all aspects of digital strategy. She also serves as executive editor of the group's media Web sites, and you'll even find her byline on PureAI.com, the group's newest site for enterprise developers working with AI. She recently gave a talk at a leading technical publishers conference about how changes in Web technology may impact publishers' bottom lines. Follow her on twitter @beckynagel.