Offshore IT Outsourcing Not Expected to Increase

If there has been one theme in outsourcing commentary from the last year, it is this: offshoring is not a panacea.

Between 1995 and 2005, however, it seemed as if it was. The dollar was strong enough that it was nearly impossible for IT professionals to be price-completive with foreign workers and almost equally impossible for CIOs to justify not taking advantage of what many saw an easy cost-saving measure.

But the model was simplistic, and as the wage advantage slipped and the secondary costs of offshoring mounted, many CIOs started bringing their work back home.

This trend is further evidenced a survey released by Robert Half Technology, an IT recruiting and staffing firm, earlier this week which found that nine out of 10 CIOs didn’t expect to increase their levels of overseas IT outsourcing by 2009.

Among companies that had tried it in the past and did so no longer, nearly six in 10 (59 percent) cited management challenges as the top reason they wouldn’t again. One third (30 percent) said that their costs savings were never realized and 23 percent said that the quality of work wasn’t good enough.

Down in fourth place, 11 percent of CIOs said that they stopped offshore outsourcing because it lowered the morale of U.S.-based workers. Hey, at least it was on the list!