20% of UK IT activity - Outsourced

From a recent story in computing.co.uk it becomes clear how closely bound the IT industry and the Offshoring model have become. Some number:

Over a third of IT departments in the UK have offshored more than half of their operations

79 per cent of the companies that opted for offshoring moved their IT functions to India, while 64 per cent of the 298 companies surveyed have shipped some of their IT set-up abroad.

However things are not all positive, especially, if we inspect the details of the managers' apprisal of the perceived benefits and risks of oursourcing:

83 per cent of respondents said that such decisions (to move IT activities offshore) represent a negative impact on the quality of their IT. Some 40 per cent believed a “lack of business knowledge” is the main issue of offshoring and 76 per cent also felt the model presented “no long-term benefit to the economy”.

Yer if there is a clear negative perception of the long term effect and the effectiveness of offshoring - why do British companies, keep and as it seem increase this practice. Cutting costs is an obvious explanation. However, this is much less so now, since the worsening UK job market has put an end to salary inflation. Unemployment has also swelled the perspective workforce.

One possible and very probable explanation is that despite the perceived difficulties and negative effects, IT and offshoring simply work well. Expertise, which is one of the main capitals within IT is nowadays readily transferred. And it would seem that the benefit of a global knowledge marketplace, outweighs the risks. Another study into the British confirms this -

ith 59 per cent of 100 UK IT leaders claiming the (offshored) model allows them to tap into a skills pool that would be difficult to create in house