While there is a lot of speculation regarding the condition of the U.S. economy, Gartner Research believes that offshore outsourcing, also referred to as offshoring, will continue to grow during the economic slowdown.  Companies will look to IT service providers to increase the percentage of labor in offshore, lower cost locations.

Businesses are focusing on cutting costs, which is increasing the popularity of offshoring.  As companies look for ways to cut costs while still maintaining productivity and maximizing profits, offshore outsourcing will become an even more attractive option.

Current activity within the outsourcing industry shows that companies still outsource even when the economy is slow.  According to Gartner’s report, many U.S. companies are taking measures to quickly implement offshoring programs and are sending more jobs to offshore locations.  If the economic downturn is only temporary, there will be many first-time outsourcers looking to offshore IT providers.  In the situation where the economic downturn turns into a sustained recession, Gartner believes that IT budgets will be cut more aggressively, which will just increase the need for offshoring.

As more companies are turning to offshoring, the outsourcing destination will be one of the main considerations when choosing an IT service provider.  It is important for companies to carefully analyze the benefits and risks of each location to determine which country would best fit the organization’s needs.

TJ Singh, a research director for Gartner, commented on India as one of the main destinations for offshore outsourcing.  In a statement he said, “Factors that will give India the edge over other offshore locations are scale and quality of labor. North American and European buyers of IT services have been the force behind a growing offshore services market and India is central to almost any discussion of offshore services delivery for these buyers. Whether it is the indigenous India-centric service providers that have a wide-reaching impact on the IT services sector, or a vast and growing IT labor pool being trained to support a global client base, India will continue to be the most-sophisticated country option to source offshore IT services in the near term.”

Offshore outsourcing boasts many benefits for the IT sector, whether the economy is slow or not.  Some of the main benefits include expanded hours of operation, access to qualified IT personnel, ability for rapid scaling of operations and the opportunity to accelerate IT implementations.

For more information regarding offshore outsourcing, contact  A&E Consulting.

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