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U.S.-based IT professionals can expect to encounter increasing competition this year for jobs and project assignments from providers of offshore IT services, according to a recently-released report from San Jose, Calif.-based Dataquest Inc., a unit of Gartner, Inc.
The Dataquest survey indicated that while only about 5 percent of the 917 U.S.-based companies surveyed are currently using offshore resources for IT projects, the use of offshore outsourcing will grow at a double-digit rate, well above the growth rate for the U.S. IT services market overall.
Just as significantly, the Dataquest study indicated that enterprises are increasingly willing to use offshore outsourcing for more complex projects such as infrastructure management, packaged application implementation and enterprise application integration.
Application design and development continues to be the IT activity for which offshore resources are most commonly used. Just over 60 percent of organizations currently using offshore outsourcing said theyre employing offshore resources for application design and development. Twenty-one percent said theyre using it for infrastructure management. And about 13 percent said theyre using it for packaged application implementation. Almost 40 percent said theyre either using offshore resources now for packaged application implementation or will do so within the next 12 months.
“Offshore is becoming a more viable option for more complex services,” said Debashish Sinha, principal analyst with Dataquest in San Jose. “That suggests more companies are becoming comfortable with the concept.”
Many potential users of offshore outsourcing still harbor concerns, however. According to the survey, the top challenges that U.S. buyers experience with offshore outsourcing are management of communications, management of budget and project timelines and management of changes in the scope of work on projects.
The Dataquest survey indicated that when evaluating offshore IT service suppliers, U.S. enterprises look primarily at two criteria: labor—cost and quality—and security.
By far the country attracting the most offshore IT outsourcing business is India, according to the report. Seventy percent of companies currently using offshore resources source them from India. Following, in order of popularity, were Ireland, China, Germany, the Philippines and Canada.
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