Feeds

End in sight for IT jobs outsourcing massacre

No CIO is going to offshore his own job

The Essential Guide to IT Transformation

The offshoring of IT work to developing countries has been very popular with accountants looking to cut costs, but the limits are being reached of what jobs can conceivably be sent overseas.

Research by The Hackett Group estimates that of the 8.2 million business service jobs available in the US and Europe in 2002, only around 4.5 million will remain by 2016, with the rest moving to India, China, and other global outsourcing centers.

But the limit will then have been reached, with barely a million left that could realistically be moved offshore, and companies that would do so would face "a PR nightmare" and risk losing staff who don't trust their employers. This would mean an end to the cost savings for Western businesses, and would leave those hosting countries in a bind, since they will have to find new targets if they are to maintain current growth rates.

"In the US and Europe, offshoring of business had a significant negative impact on the jobs outlook for nearly a decade," said The Hackett Group chief research officer Michel Janssen. "That trend is going to continue to hit us hard in the short-term. But after the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased."

The IT profession has been hardest hit by the offshoring of service jobs, and will see a 54 per cent drop in employment between 2002 and 2016. Finance employment will fall 42 per cent, procurement jobs by 36 per cent, and human resource jobs will shrink by nearly a third as part of the drive to lower costs through offshoring and automation.

India remains the top spot for outsourcing, taking about 40 per cent of jobs, thanks in part to having an educated and largely English-speaking population. Eastern Europe has around 20 per cent of the market, but faces rising costs, and China is the destination for around 13 per cent of service jobs. ®

The smart choice: opportunity from uncertainty

More from The Register

next story
Microsoft's MCSE and MCSD will become HARDER to win
Redmond decides it won't replace Masters certifications, so lesser certs get more rigour
Pinterest diversity stats: Also pale and male (but not as much as Twitter)
Cats'n'flowers site latest to admit white men rule its roost
'Oh my god – Mark Zuckerberg wants to meet me'
'The Swiss have got no great interest in working with Apple'
Dammit, Foxconn: Where's our 1 MILLION-strong robot ARMY?
'Foxbots' just aren't good enough to take up the slack
Devs: Fancy a job teaching Siri to speak the Queen's English?
Spik propa lyk dis blud innit, ya get me?
Bankers bid to use offshore temp techies
WikiLeaks publishes Financial Services Annex to 50-nation Trade in Services Agreement
Hey! Where! are! the! white! women! at!? It's! Yahoo!
In non-tech jobs, that is – still mostly white men running Marissa Mayer's web biz
Non-techies: The cute things they say
'OK, smartass, the firewall is blocking the proxy server.'
Join me, Reg readers, and help me UPGRADE our CHILDREN
Think of the children? I just did, says Dom Connor
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.