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More Investments in Outsourcing
IT Services step towards offshore

The latest surveys conducted by the market research leading company Gartner Dataquest show that the demand for offshore sourcing is still immature and penetration of the U.S. market is low, however, the industry will continue to experience steady growth. It proves once more that emergent markets not only offer a good distribution site, but also represent an increasingly reliable and rich source of professionals and ideas.

Gartner Dataquest conducted phone interviews, in January and February 2002, with 917 U.S.-based companies (with 1,000 employees or more) to gauge their interest in offshore IT services. Five percent (42 companies) indicated they currently use or plan to use offshore resources in the next 12 months. Among respondents who expect to increase their budgets for offshore initiatives in 2003, 69 percent expect budgets to be 1.5 times that of 2002. Twenty-six percent expect to nearly double their spending for offshore IT services within the next year.

According to the survey, the top opportunities for growth in offshore services over the next year will include enterprise application integration (EAI) services, applications outsourcing, packaged application implementation and integration with legacy applications beyond applications development and maintenance services.

Currently, India is the primary country of choice for IT service spending with 70 percent of survey respondents acquiring offshore services from India. Eighty-three percent say they plan to outsource to India within the next year. Canada, Ireland, Singapore, Mexico and China were also sited as countries to outsource to.

Even with the current political situation, Gartner Dataquest predicts India will maintain its leadership position and possibly expand its penetration over the next 12 months.

"The India/Pakistan crisis has increased the level of focus on the need to manage Geo-political risk, but has not substantially changed plans for offshore services or the choice of country," said Debashish Sinha, principal analyst for Gartner Dataquest's IT services group. "We advise clients to work with their offshore vendors to focus, update and improve their current business continuity plans in the wake of current events."

Further discussion of offshore outsourcing and related services issues will be discussed at Gartner Symposium/ITxpo, October 6-11 in Orlando, Florida.

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