Outsourcing - Where IT Outsourcing Is and Where It Is...

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Where IT Outsourcing Is and Where It Is Going: A Study Across Functions and Department Sizes by Kelly E. Fish * kfish@astate.edu and John Seydel jseydel@astate.edu P.O. Box 130 State University, AR 72401 Voice: (870) 972-3416 FAX: (870) 910-8187 *Corresponding author
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Where IT Outsourcing Is and Where It Is Going: A Study Across Functions and Department Sizes Abstract: Although there are forecasts of overall information technology (IT) outsourcing growth, there is no published research on which particular functions are being outsourced now or in the near future. Additionally, there is no literature on how outsourcing growth and how it may be related to department and/or firm size. The authors survey 181 upper level IT professionals across the United States to assess what they are outsourcing now and what they will likely outsource over the next three years. The results show that the areas of applications development, applications maintenance, personal computer (PC) maintenance, and systems maintenance will experience tremendous growth, while data center operations, systems development and telecommunications/LAN will experience very healthy growth. PC acquisition and project management will experience a lesser expansion. This growth will be led by what are now large IT departments. These results have implications for IT professionals and firms across the US and around the world. Keywords: careers, information technology, offshore competition, outsourcing, project management, systems development, technology skills, technical support INTRODUCTION Information technology (IT) outsourcing is now a strategic option that is on just about every CIO’s plate. The benefits and risks are becoming clearer every year as the anecdotes and research are disseminated in either practitioner or academic journals. Implementations of outsourcing contracts are becoming commonplace as the IT industry has become more comfortable doing business in such a manner. Indeed Gartner Inc. research estimates that offshore outsourcing accounts for nearly 10% of the $536 billion global IT services industry. The trend is expected to continue as some estimates have IT outsourcing growing at 30% annually for the foreseeable future. The focus on IT costs reduction and emphasis on improving business performance appear to be the two primary motivations for such an unprecedented growth rate. 2
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The IT labor market is rapidly becoming a truly global market as IT professionals around the world are bidding on contracts. For example, much of the IT talent in the US must now compete with Indian professionals who work for about one-sixth of the US wage. One consequence of all this has been the tremendous job losses suffered by US IT professionals. Forrester Research predicts that five hundred thousand computer software and services jobs in
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Outsourcing - Where IT Outsourcing Is and Where It Is...

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