IT Offshore Outsourcing: Early Predictions for 2009.

TEAM International reviews and shares recent research findings and expert predictions for key attributes of the 2009 IT offshore outsourcing environment.

The year 2008 is slowly reaching its end leaving many IT companies wonder what the global offshore outsourcing market is going to be like next year. On analyzing the recent survey results, TEAM International concludes that in spite of financial meltdown and world economic crisis, predictions for the future development of IT offshore outsourcing are rather optimistic.

According to the newly released survey of CIOs and IT executives at 230 companies, commissioned by the Society for Information Management (SIM), most IT companies expect their 2009 budgets either to exceed those of 2008, or to stay flat. To be more precise, 44% of IT leaders plan to increase their IT budgets in 2009, 37% plan to leave their budgets at the same level as in 2008 and only 19% of respondents admitted planning to cut their IT budgets. Comparing these plans to the actual figures attributed to 2008, the following data are arrived at: in 2008 46% of IT companies significantly increased their IT spending over the limits of 2007, 28% kept their budgets flat and 26% reduced their budgets. While in 2007 the average IT budget equaled 3.5% in revenue, in 2008 this figure rose to 3.82%. Addressing the issue of IT head count, 40% of the survey participants reported increasing their IT staff over 2007 levels, 36% kept their IT staff flat, and 24% reduced their IT head count compared to 2007 levels. The SIM survey also finds that while only 4 out of 10 IT firms plan to add in-house staff in 2009, the majority of companies are still focused on ramping up their offshore resources. Traditionally, the projected rise in offshoring relates to organizations looking to cut operational costs and to improve efficiency, both of which are crucial factors in times of economic stress.

Very similar results were obtained from a survey by Info-Tech Research, targeting more than 150 IT companies across the United States. The research shows that in spite of the fluctuating economic conditions only 1 in 5 companies plan to reduce their IT budgets in 2009. In addition to that, more than 60% of IT departments of the surveyed companies report focusing on reducing costs via offshore outsourcing. Out of a variety of means that companies have to reduce costs, the most effective one determined by Info-Tech is Vendor and Outsource Management. This option is also characterized as causing the fewest negative effects on the employee morale, IT operations, and business objectives.

Another survey of 1,400 CIOs, conducted by Robert Half Technology, a California-based search and staffing firm, generally supports the optimistic predictions to the utilization of IT outsourcing in 2009. Of 111 CIOs, whose companies are currently engaged in outsourcing, 43% report planning to increase their offshore transactions in 2009.

Based on its own market observations, TEAM International concludes that the IT industry is likely to be unaffected or only minimally damaged by the economic downturn. Information Technology is centered on the drive to improve efficiency, to increase productivity, to cut costs, and to seek revenues where they were otherwise thought unavailable. Because outsourcing also brings into play additional means to achieve similar results, a positive outlook on IT outsourcing in 2009 is not just a fiction, but a naturally determined reality.

Based on publications by Information Week , Info-Tech , Wall Street Technology < www.wallstreetandtech.com >