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Tuesday, August 30, 2005

Costs Precede Expertise As Driver For Offshoring

(Via Silicon.com) New research indicates that companies providing IT products and services will continue to increase their use of outsourcing agreements in order to lower overhead expenses. Evans Data survey finds, 33 per cent of businesses surveyed intend to increase their use of outsourcing during the next year, while only 6 per cent said they are planning to decrease their number of outsourcing pacts. In terms of overall workload, 45 per cent of respondents to the Evans survey said they outsource less than a quarter of their development operations, with only 7 per cent reporting that they farm out better than 50 per cent of that sort of work. Companies are focused increasingly on outsourcing as a way to cut costs rather than find specific expertise, reversing a trend of years past. A significant number of enterprises said that saving money was their primary goal in adopting outsourcing pacts, while a lesser number specified expertise as their objective.The situation has changed in five years – while in 2000 only 15 per cent of the companies surveyed in 2000 listed cost cutting as a main driver for outsourcing, while 44 per cent said they used the arrangements specifically to garner skilled talent. Researchers at Evans said that they expect the trend toward budget-related outsourcing to continue to grow. Another interesting result of the survey highlights lot more companies planning to spend more on IT over the next year.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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