Offshore outsourcing has been one of the main trends in the IT industry these recent years and this trend will most likely continue to grow in the coming years. Offshore outsourcing means sending some or all of a business’ IT-related work to a foreign jurisdiction, for cost-cutting purposes. This trend shows specific characteristics, which might translate into interesting new opportunities for e-businesses.
The Internet and high-speed connections make it possible to export IT-related work from a developed country to areas of the world where there is both political stability and lower labor costs or tax savings. Cost savings can amount to as much as 40%, which is considerable in such a competitive sector. Although some economists worry that offshore outsourcing might have a chilling effect on economic recovery and dries up IT talent, this trend is expected to keep growing in the near future. Companies might outsource their IT work in order to (i) free up internal resources; (ii) gain access to world-class capabilities; (iii) increase revenue potential; (iv) increase process efficiencies; (v) follow company philosophy of outsourcing non-core activities; (vi) compensate for lack of appropriate skills. IT work outsourced offshore from the US is primarily handled by India, followed by Ireland, China, Germany, the Philippines, and Canada.
