What Does Outsourcing Mean to You?

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According to a recent report from the META Group Inc., 70 percent of companies are currently outsourcing, and the research group expects that number to increase to nearly 100 percent by 2006. Gartner Inc., another research firm, recently reported on offshore business process outsourcing, which according to its research will reach $1.8 billion in 2003, a 38 percent increase from 2002 totals.

 

 

 

Are you feeling any impact in your career from this increase in outsourcing?

 

 

 

According to John Luc Alarcon, senior vice president and director of Data Services and Published Research for META Group, the “generalization of outsourcing” including the “externalization of commoditized IT services” is having a dramatic impact on the role of chief information officers and the IT organizations they run. “In addition,” he added, “organizations are starting to realize that improving value from outsourcing and vendor relationship management can generate substantial business benefits.”

 

 

 

In other words, the trend toward outsourcing of IT functions is not going to go away anytime soon. So where are those functions going? Well, when it comes to offshore outsourcing, most of it goes to India, which Gartner said is seeing business process outsourcing revenue growth from just under $1 billion in 2002 to $1.2 billion in 2003. India represents 66 percent of the offshore BPO market. But offshore BPO actually represents less than 2 percent of the total BPO market. And Sujay Chohan, research vice president for Gartner, said that most of the offshore outsourcing is not represented by entire business processes, but is “mostly relegated to contact centers and back-office transaction processing.”

 

 

 

Even though many businesses see outsourcing as a positive way to impact their organizations’ bottom line, META Group said there are a number of misconceptions to look out for. These include:

 

 

 

·         IT expenses will automatically be reduced.

 

·         Vendors use best practices.

 

·         Offshore vendors offer huge savings.

 

·         Vendors are simultaneously better, faster and cheaper than internal IT.

 

 

 

None of these statements should be considered a given. Have you seen layoffs at your organization as a result of outsourcing? Let me know what you think. Feel free to vent, rant or comment by sending e-mail to me at ehollis@certmag.com.

Emily Hollis is associate editor for Certification Magazine. She can be reached at ehollis@certmag.com. 

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