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.


Comments

8 Responses to “IT Outsourcing On the Rise, While Offshoring Plummets”

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  2. Tyrone on March 31st, 2010 2:49 am

    I believe in this. Outsourcing has been the product of the regression in the economy and the loss of local or in-house workers due to inefficient profits and having high expenses. That’s why by using the foreign service or outsourcing them, developing countries have been well known for their low price wages and retention of good training and business skills to help revive these businesses.

    Tyrone

  3. Stan Lepeak on March 31st, 2010 4:28 am

    While the use of offshore outsourcing as a means to access contract labor or perform small IT projects may have declined in favor of the use of cheaper and recently more abundant local UK labour, EquaTerra research consistently finds that offshore outsourcing is growing among UK organisations engaged in larger and more formal outsourcing efforts. The 2009 edition of EquaTerra’s UK ITO Service Provider Performance and Satisfaction Study (http://www.equaterra.com/The-Library/By-Topic/UK-Service-Provider-Performance-and-Satisfaction-Study-2009-1530C1046.html) analyzed over 160 UK ITO contracts valued at a minimum of 1M GBP per annum and found that 71% of UK organisations are using offshore outsourcing. 57% of these organisations plan to increase the use of offshore outsourcing going forward, 39% will maintain current usage levels, and just 4% plan to decrease the use of offshore outsourcing.

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  5. Eric on April 2nd, 2010 12:53 pm

    Outsourcing is definitely the wave of the future, joining cloud computing and crowdsourcing for services. Protectionist policies won’t keep jobs from offshoring.

  6. john on April 23rd, 2010 4:37 pm

    IT outsourcing is a good way of doing things in many cases. For it saves time and money. But despite of its advantages, it also has negative effects. One example is, it causes destruction in the jobs in certain countries.

  7. Kathy Dobson on April 24th, 2010 6:16 pm

    Outsourcing is definitely a wonderful option for business. It creates opportunities for both the employer and the employed. Despite of regression, this is the trend that will help create more growth since it helps lessen expenses yet receive the same quality of service you’ll get from domestic employees.

  8. Ellan on June 30th, 2010 7:50 am

    Yes i think Outsourcing IT will grow even more in the future. IT is becoming somthing of a must now days..

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