With the simultaneous pressures of cost savings and software-centric innovation, CIOs continue to look abroad for development projects and managed services.
A global CIO study from 2010 reveals that 90 percent
of CIOs will be maintaining or increasing offshore outsourcing projects in 2010
and 2011. According to the UK-based IT staffing and managed services firm
Harvey Nash, outsourcing has been greatly used during the recession and CIOs
are inclined to continue using outsourced services.
In its 2010
Global CIO Survey, Nash surveyed 2,855 IT executives
from around the world and found 62 percent outsource software-application
development; 53 percent outsource software maintenance; and 53 percent
outsource IT infrastructure services. Twenty-two percent outsource systems
integration, 8 percent outsource BPO, 8 percent outsource HR BPO, and 6 percent outsource their entire IT
department. Thirty-six percent of CIOs are increasing their budgets in 2011 for
offshore outsourcing activities.
The rising star
for offshore outsourcing is Eastern Europe, but India is still a major player. Vietnam, the Philippines and China are also seeing increased IT activity. Says
the Harvey Nash report:
"The role of
India in offshore outsourced programmes remains
dominant, but the dominance is waning and the rise of Eastern Europe as a preferred hub, especially for European-based
CIOs, is undeniable. More than one in ten global CIOs now undertakes offshore
activity in Eastern
Europe. That
figure is significantly higher within those European countries closest to the
region."
Nearly half of
CIOs-48 percent-spend 10 percent of their IT budget on outsourcing. Roughly a
third of CIOs have their budgets cut for 2011; forty-three percent had
declining budgets in 2010.
Key issues facing
CIOs and the IT department include increasing operational efficiencies, cost
savings, and improving business process. All three of these areas weighed
heavily on the minds of CIOs, as more than 70 percent of them rated these
highly. Other issues revealed by the survey include new-product development,
entering new markets, improving price competitiveness, green IT and mobile
commerce.
CIOs, according
to this study, are looking for skills that lean heavily toward business acumen.
The top rated
skill with the highest percentage of demand-44 percent-is business analysis, followed
closely by project management (37 percent) and business relationship management
(31 percent). Architecture (35 percent), IT strategy (28 percent), development
(23 percent), testing (22 percent) and service management (21 percent) were
eclipsed by skills that help the CIO work strategically with the business. The
most surprising technology skill to fall in the bottom ring of demand in the
study is security, at 16 percent.
Despite the cost
savings, offshore outsourcing and hybrid models that mix onshore and offshore
services come with their own set of issues. As the study points out, business
culture and project expectations are not always on the same page. From the
Harvey Nash report:
"For both
CIOs and their outsourcing providers, the key statistic that continues to cause
concern is a growing level of dissatisfaction with project management
standards, despite the overall popularity of the offshore outsourcing
model."
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