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Offshoring blamed in part for IT's jobless recovery

December 6, 2010 06:00 AM ET

The biggest jump in job losses came in 2009, with a net loss of 311,000 IT back-office jobs in the U.S. and Europe, according to Hackett Group figures.

Companies shift jobs offshore to save anywhere from 30% to 70% of worker costs within a brief period, sometimes as quickly as a quarter, said Janssen. Companies get the most savings by shifting entry-level positions offshore, he added.

Jerry Luftman, a professor at Stevens Institute of Technology's Howe School of Technology Management in Hoboken, N.J., who conducts an annual survey of IT budget allocations for the Society for Information Management (SIM), said he has found a similar shift in IT budgets toward offshoring.

In better economic times, about 3% to 4% of IT budgets on average were spent on offshore outsourcing. Today, IT departments allocate an average of 5% of the budget on offshoring, and that allocation is expected to rise to 7% in 2011, said Luftman.

Nonetheless, Luftman is bullish on the outlook for IT employment for people who have the right skills, including students coming out of college.

"The bottom line is IT is still the place to be for a career point of view," said Luftman. "Not only are there great job opportunities in the short term, I think for the foreseeable the future the opportunities are not only going to be there, but they will increase. Everything will be much more dependent on IT."

IT workers, however, will need more than simply technical skills, he said. From an employer's perspective, "if you're just going to offer me technical skills, I might as well just go offshore and get it a lot cheaper," said Luftman.

According to SIM surveys, employers are now are seeking a good balance of skills from IT professionals, including technical skills, general business knowledge, industry knowledge, negotiation and communications skills, and a sense of ethics, said Luftman.

He said his students are getting jobs quickly, and participation in college fairs by companies is at high levels.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at Twitter@DCgov, or subscribe to Patrick's RSS feed Thibodeau RSS. His e-mail address is pthibodeau@computerworld.com.

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