IT Outsourcing On the Rise, While Offshoring Plummets
March 30, 2010
According to a major UK business survey, IT outsourcing appears to be a growing trend to UK-based suppliers.
PeoplePerHour, Europe’s largest online business marketplace, has revealed the results of its 50,000 plus business users. The surveyed underscored that 60 percent of UK’s businesses are outsourcing more than a couple of years ago. One of the causes of this has been the recession. The downturn in the global economy has pushed companies to outsource so that they remain cost efficient. Another side effect of this move was a downsizing in employee headcount.
However, the survey also found that 61 percent of the corporations polled are now opting to outsource IT work to domestic vendors rather than to faraway destinations like India and the Philippines that offer cheaper rates.
The survey is supported by PeoplePerHour.com’s research into behavior of buyers. The results are highlighted in the PPH Economy. The results show that less than 7 percent of companies give away projects to the cheapest bidders.
PeoplePerHour.com founder Xenios Thrasyvoulou was quoted as saying, “You might have expected offshoring to grow through the recession as UK businesses looked to cut costs by outsourcing IT requirements to cheaper overseas suppliers,” reports onrec.com.
“However, responses to our survey and analysis of transactions on the site points to one conclusion: outsourcing is growing and offshoring is falling.”
This decline in offshoring may be caused by the recent incline of the ‘freelance economy’ in the U.K. In addition, the availability of skilled IT professionals within U.K. offering their services are on the rise.
During the economic decline emanating from the global credit crisis in 2008, many professions who lost their jobs from layoffs quickly turned to freelancing rather than entering the job market again. In fact, this trend was already growing prior to the recession, but the recession added to its rapid increase. With the option of widespread broadband technology and PeopleHour.com, freelancing is a very real option for many IT professionals. Moreover, this trend is expected to grow in the near future.
The PeoplePerHour.com poll found that 41 percent of those surveyed outsource IT work, while 29 percent were involved in Marketing and PR. The survey paints an optimistic picture for the IT sector within UK. “With more businesses choosing to outsource to UK-based suppliers than ever before, prospects for the UK IT industry are very rosy indeed,” said Thrasyvoulou.