Readying for a Trip Offshore

Computerworld - The economy is forcing companies to examine every cost-cutting opportunity. As a result, offshore IT operations are becoming increasingly attractive. Drastically lower wages overseas make the business case compelling, and telecommunications improvements have finally made it viable.
Low-skill jobs have gone offshore for years, but higher-skill jobs are now moving to other countries.
Offshore estimates are staggering. Forrester Research is forecasting that by 2015, 3.3 million white-collar jobs -- 472,632 of them in IT and mathematics -- will shift from the U.S. to countries with lower labor costs, taking almost $136 billion in wages with them.
Even domestic IT outsourcers are being forced to go offshore. Historically, they have resisted, because lower wage structures result in lower revenues. But Electronic Data Systems, Accenture, Affiliated Computer Services and others now have offshore facilities and are recruiting heavily in India.
Microsoft is moving some Windows development to India. Other current offshore outsourcing efforts span diverse industries, going well beyond IT:
• Massachusetts General Hospital has some of its CT scans read by Indian radiologists.
• Fluor Corp. employs 1,200 offshore draftsmen and engineers to develop blueprints for industrial facilities.
• Indian and Chinese engineers design chip circuits for Intel and Texas Instruments.
• Proctor & Gamble has 650 employees in Manila helping prepare worldwide tax returns.
• Russian engineers are designing luggage bins for the Boeing 777 airplane.
Other industries are leading the way offshore, but IT is catching up fast. I conducted an informal survey of 400 IT leaders at the Computerworld Premier 100 conference in February. Currently, 72% of those leaders' companies aren't involved in any offshore development or maintenance. However, most said their companies plan to make the offshore leap soon; less than half will still be uninvolved in two years. By 2005, approximately one out of every 10 of the companies that send IT work offshore will spend more than 25% of their development and maintenance budgets offshore. In fact, one CIO told me that he'll have 70% of his development and maintenance staff offshore in three years.
Start planning now. Before your CEO asks, look at the following issues:
• Determine if offshore is appropriate for your company. Some organizations can't go offshore for security reasons.
• Define the scope. Common candidates for moving offshore are call centers, application development, application maintenance and infrastructure. Some jobs, especially those requiring lots of face-to-face interaction, are difficult to move offshore.
• Understand the trade-offs of various offshore locations. The leading IT locations (primarily India, Ireland and the Philippines) have