How the presidential election will impact IT outsourcing

By Stephanie Overby, CIO |  IT Management, outsourcing

"Democrats have been pushing the issue of tax breaks for offshored work, but they've been pushing that since the 2004 election," says Norm Matloff, a professor of computer science at the University of California, Davis.

"Remember, Obama had a Democratic Congress in 2009, and they did nothing on this," says Matloff. They won't do anything if they control Congress and the White House next year either. It's just a phony issue."

A Romney administration will likely tone down the rhetoric, says Rutchik, but deliver the same results.

2. Public Sector IT Outsourcing

Public sector outsourcing is bound to increase regardless of who lives at 1600 Pennsylvania Avenue. According to a September, 2012 survey of public sector finance executives conducting by outsourcing analyst firm HfS Research, lowering costs and improving efficiency are their two most important objectives.

"Governments--whether state, federal or local--need more levers to reduce costs, and guaranteeing government salaries and corresponding increases, combined with the relative difficulty in enacting labor force reductions, are not the answer," says Pace Harmon's Rutchik.

Both shared services and outsourcing can be part of the short- and long-term solution for reducing the costs of back-office functions while maintaining front-line services, says Phil Searle, research fellow for shared services strategies for HfS Research.

"A Romney administration may be more open about doing this as it's consistent with their messages of smaller government," says Rutchik. "And they are more likely to look at outsourcing than increasing government payrolls."

3. Domestic IT Sourcing

Sourcing IT services closer to home will continue to increase, regardless of politics.

"Based on the current economic climate, the value equation has shifted toward encouraging domestic sourcing in a very natural manner," says Paul Pinto, managing partner with outsourcing consultancy Sylvan Advisory. "India experiencing double-digit growth in salaries and attrition coupled with the U.S. experiencing double-digit decreases in the same key indicators [means that] buyers of services are now able to capture a similar degree of value by electing to use domestic providers." Offshore outsourcing pioneers, including GE and GM have recently announced plans to bring thousands of previously offshore roles stateside.


Originally published on CIO |  Click here to read the original story.
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