The backlash against offshoring will deepen over the next few months, but animosity against it will die down at the end of 2005, according to Gartner analyst Craig Baty.
"Global sourcing of IT services is an irreversible megatrend although its true impact is yet to be felt," he said during the 3rd Regional Infocomm Conference. "By 2006, we will see a reliable global sourcing market." The current reaction against IT offshoring, in countries such as the US and Australia - based on the assumption that offshoring causes job losses - is misguided, according to Baty.
"The idea that jobs will be lost through offshoring is the most emotional topic of outsourcing," he said. "But it is in fact an insignificant issue that will go away."
According to Baty, IT offshoring currently accounts for less than five percent of overall US job losses. The job loss debate is just a smokescreen to cover up less attractive reasons for opposing offshoring, according to Baty. "Racism and xenophobia are alive and well in the West," he said. "The view is often 'Australia's okay, it has kangaroos and they help in the war against terror but China and India, well, we just don't know what's going on in those countries'. It takes just one mistake by an overseas vendor to bring this debate up all over again."
However, according to another survey out this week, which questioned 150 top IT execs, it may be Baty who has got it all wrong.
The Meta Group claimed that offshoring was a bit of a red herring, with companies saving far less than they thought they would. They were also frequently failing to find out the effect on costs - even when saving money was the main reason for the decision in the first place, it said.
This situation looks all the more troublesome when you consider that Baty insists that "about 60 percent of offshore outsourcing companies will fail within three years. It always works like this."
But then on the other side of the coin, a survey of over 100 IT directors will claim later this month that companies are wasting $300 million a year because they aren't offshoring enough.
Or perhaps the real problem is that hotly contested topics such as outsourcing business to foreign countries inevitably produce an array of strongly-worded surveys, all seeking an opportunity to sell what they see as the solution - be that new products or reports on the situation.
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