Quality and jobs will prevail in offshoring blitz

Despite falling headcount in many large IT departments and moves by the biggest companies to move more tech functions offshore, there are still ways to stay employed and fend off the rising tide of outsourcing.

While a report from the Association of Computing Machinery (ACM) advises IT pros to train in areas less likely to be automated and to develop high-level skills that will escape the hit of the full impact of globalization, Australian IT managers have a few recommendations of their own.

They are relying on their expertise and quality of work to overcome claims by research firm Gartner that one in 10 IT departments will be lost in five years as a result of outsourcing.

In its forecast, Gartner said IT departments will shrink as technology becomes more commoditized and functions are moved to other parts of the globe.

Similarly the ACM said an increasing number of IT functions, from call center operations to fundamental research, will continue to move offshore.

The report said 30 percent of the world's 1000 largest companies are moving jobs to developed countries.

However, Australian IT managers said companies that are in the middle of, or currently contemplating outsourcing or offshoring IT work, will learn the hard way.

They are quietly confident that when customers do deal with an outsourced provider, the parent company soon brings the service back in-house because of poor quality work.

Edward Hore, IT manager for automotive specialists Bob Jane Group, said in the next three to five years companies will realize that offshoring is a bad idea and bring it all back in-house.

Hore said Gartner is "usually on the ball", but this particular claim about IT departments shrinking or disappearing is ridiculous.

"Offshore support will clearly start to come back in house ... in 1999 Gartner said all support desks will be outsourced but in the last three years we have seen the exact opposite as IT departments are growing rapidly," Hore said.

"When you call an offshored helpdesk or call center, you realize that nothing will be done and customers just end up dealing with their own problems. Offshore work barely lives up to the Service Level Agreements (SLA) without any responsibility.

"If large companies offshore the IT department, then smaller, local companies have a chance at the [outsourcing] dollars as many [SMBs] cannot manage a local support desk anyway."

Michael Houlahan, information technology director for the University of Western Sydney, said the strong trend to offshore what used to be in-house software development will lead to greater use of off-the shelf packages.

Despite Gartner's claims, Houlahan said it is hard to believe IT will become so commoditized or so simple that it can all fit into an offshored model.

"The claim that one in 10 IT shops will be lost to outsourcing is hard to believe, but across a broad spectrum offshoring fits some industries, like call centers and telecommunications," Houlahan said.

"You have to retain some form of IT expertise in-house."

Houlahan admitted it is getting increasingly harder to find staff with the right technical skills due to the downturn in people signing up for IT courses.

"This might be reflective of the job market or because of outsourcing, or one element may be feeding off another," he said.

"As more IT gets commoditized, theoretically it gets easier to outsource as an alternative to keeping the work internally, but increasingly IT underpins everything the business does; in terms of risk management, would you outsource to save money and [by so doing] increase the risks?"