End in sight for IT jobs outsourcing massacre
No CIO is going to offshore his own job
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. ®
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COMMENTS
Re: maybe if they
Management & Accountants are short-termist at best. They see the upfront cost of outsourcing and go "Kerching" - Savings. They are not recognising what actually happens.
The management where i work like this and perpetuate lies to justify the reasons.
1 - the skills are not in the UK to do this work - er we managed fine for the last 30 years and there wont be any skills left if you keep firing them all
2 - The quality is good - Absolute crap. The developers cut-n-paste existing code and do the bare minimum to satisfy the requirements. no quality at all. If it weren;t for the remainder of the on shore staff correcting the sloppy code we would have killed our buisness by now (soon there wont be any left to do that so it; be fun to see)
3 - They are protecting staff from future redundancy, What by firing them now?
Every single outsourced function has resulted in a worse, but cheaper (at least on paper) service. What happens is the remaining onshore staff spend more time and therefore cost on correcting these deficiencies. Making them look even more expensive and ripe for further offshoring.
As for skills and quality, maybe some of the offshoring partners can provide that - but we haven;t signed up to those. EG a database issue - very poor poerformance suddenly rose it;s head, our DBA service is now offshored and so a ticket was raised. After three days of investigation (still within the negotiated SLA!?!) nothing had improved. "Investigations were ongoing". One of the onshore guys decided to google it, found a possible solution and mail it to them. Lo and behold the error was fixed. Our guy would have done it himself but his access was removed as part of offshoring.
How is that good value for money?
Anonymous coward as I still want to hold onto my job for as long as it is in the UK
maybe if they
Left the jobs here, the knock on effects of the jobs would be a better economy. People who earn money spend it.
Instead to save a a few pence they move the jobs abroad. We lose out in tax revenue, jobs, with a Hugh knock on effect, we lose skills.
What clever accountants there are.
A largely English-speaking population???
Obviously written by someone who's never called a tech support line in the last 5-10 years!!! I would not call what what is typically spoken on the other end of a support phone line "English".
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