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Gartner: Outsourcing to boom this year

Matthew Broersma ZDNet.co.uk

Published: 11 Apr 2003 15:42 BST

The pace at which companies are transferring IT services to offshore contractors is speeding up, with the outsourcing market set to grow more than 40 percent this year, according to new figures.

Research firm Gartner said there is increasing pressure on chief information officers in Western Europe to cut costs by taking advantage of cheap, highly-skilled labour outside the region. India is the leader in IT outsourcing because of its inexpensive pool of highly-skilled workers, with 90 percent of offshore revenues, but regions such as Eastern Europe and Ireland are catching up.

China and Russia are also making inroads, but so far lack the resources and infrastructure to challenge India, Gartner said.

Failure to take advantage of outsourcing could mean companies lose their competitive advantage. As a result, the company expects that 75 percent of European enterprises and the largest medium-sized companies will consider offshore services by the end of this year. Britain currently leads Europe in using offshore services.

The move to outsourcing isn't without problems, however, and Gartner noted that shifting to offshore often leads to job cuts and layoffs -- an issue BT is currently dealing with as it seeks to run more of its call centres out of India.

Gartner is presenting its annual Outsourcing and IT Services Summit in London on 28 and 29 April.

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