Strategic Sourcing

The off-shoring market is dominated by India, which has made a sizeable investment in IT education, as well as offering incentives to software companies to set up this type of operation. India has over 50 per cent market share, whilst other significant locations include South Africa, Sri Lanka, Eastern Europe, and China.

Butler Group forecasts significant growth in the off-shoring market over the next four years, with the worldwide market value rising from US$17 billion in 2001 to US$50 billion by 2005.

Off-shoring companies have gone to great lengths to ensure that the language skills, culture, and business practices that they offer are suited to the markets in which they operate. Many companies have set up subsidiaries or maintain satellite offices in their target markets to provide local project management, as well as their development locations off-shore. Butler Group considers that a local project manager is essential to the smooth working of an off-shoring relationship.

Conclusions

The range of skills required by a modern IT department is huge, expensive to maintain, and often unmanageable. It no longer makes sense to provide all IT services in-house when there are efficient alternatives that have addressed the issues of control, security, cost, and viability that have in the past been the major barriers to outsourcing.