July 30, 2003
(Computerworld)
Between now and the end of 2004, one out of every 10 jobs at U.S. IT vendors and services providers -- and one out of 20 IT jobs at user companies -- will be moved offshore, according to a report released yesterday by Gartner Inc.
Through 2005, fewer than 40% of U.S. IT workers whose jobs have been moved offshore will be "redeployed" by their current employers.
The Gartner study, which is continuing, draws upon IT employment figures maintained by the Information Technology Association of America, an Arlington, Va.-based industry association that places the U.S. IT workforce at 10.3 million people.
For its part, Gartner is still trying to determine the total number of jobs that will be moved offshore to places such as India and Singapore, said Fran Karamouzis, a Gartner analyst. A November 2002 report issued by Cambridge, Mass.-based Forrester Research Inc. predicted that 3.3 million U.S. services jobs -- including 472,632 IT and mathematics positions -- will be sent offshore by 2015.
The challenge Gartner has encountered in trying to determine the total number of U.S. IT jobs that will be affected "is that there's a level of new job creation" that has to be factored into the calculations, said Karamouzis. To that end, the Stamford, Conn.-based research firm has also had difficulty coming up with a "definitive conclusion" as to which industries displaced U.S. IT workers might move to, such as biotech, said Karamouzis.
"As the economy begins to improve, there may be public and legislative pressure that could impact those projections" on the number of U.S. IT workers who are displaced by offshore outsourcing, said Craig Symons, an analyst at Giga Information Group Inc. in Norwalk, Conn.
For his part, Symons said he would expect to see the financial services industry leading the push among U.S. vertical sectors that shift a growing portion of their IT work to emerging markets. That's largely because banks, brokerages and insurance companies have historically "been leading the curve" when it comes to adopting new technologies and IT methodologies. Another factor is the fact that financial services firms typically spend 8% to 11% of their annual revenues on IT, as compared to 3% for most other industries, Symons added.
Still, he was quick to point out the increasing number of U.S. software companies that are sending their product development work overseas.
"Some of this is being driven by standardization -- more [software] companies are writing in Java and J2EE" and vendors are finding it easier to distribute phases of their development work to different regions, Symons said.
Maria Schafer, an analyst at Stamford, Conn.-based Meta Group Inc., agreed with Gartner's estimates that the number of jobs sent overseas by U.S. IT vendors and service providers "may well be near 10% by the end of next year." However, she said she thinks Gartner's estimate that 5% of IT jobs at end-user companies will be sent overseas by the end of 2004 "is wildly high."
Moving jobs offshore "takes a lot of different pieces coming together, not least of which is an organization strategy and plan, an available workforce and most importantly, transition time," said Schafer. "It takes a lot of effort to manage remotely what you've up to now managed [and not necessarily well] locally."