Offshoring inevitable, so get over it

The movement of jobs from high cost to lower cost countries is now inevitable and attempts by Western governments to stop it happening are doomed to fail, says analyst firm Frost and Sullivan.

Some higher cost countries have tried to pass laws to stop the export of jobs but if successful this would force a higher cost base on firms which would then lose out to more competive firms not so restricted. The final result of trying to stop jobs being exported could be even the loss of even more jobs.

According to a new Frost and Sullivan survey, IT job exports will grow at a compound annual growth rate of 5.9 per cent between 2002 and the end of 2004. In 2004 some 826,540 jobs will move from France, Germany, Hong Kong, Japan, the US and UK, representing a combined value of $51.6bn. The US and Japan are top two exporters of IT jobs in 2004. Germany is top job exporter in Europe - it has offshored $48.2bn worth of jobs since the trend began. The UK businesses are most likely to offshore software development and testing.

Satisfaction levels with offshore projects are "unexpectedly high". The survey found most respondents rating their satisfaction between 3 and 4 on a 5 point scale.

India is still the top destination country for offshored jobs. The survey notes that many Indian companies have higher CMM (Capability Maturity Model) ratings than their customer companies. China is in second place but with less than half as many jobs as India. Frost and Sullivan expects this difference to reduce because the Chinese government is actively promoting certain regions for technology jobs and improve skills.

Frost and Sullivan used a combination of primary research in 14 countries and surveys of IT decision makers in France, Germany, Hong Kong, Japan, the United States and the United Kingdom. ®

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