Thursday, January 24, 2008

Offshore outsourcing not suited to small shops


Outsourcing IT jobs to offshore locations doesn't always deliver the cost-savings and management benefits it promises, especially for smaller companies.

About 94% of CIOs polled by the IT staffing and consulting company said they do not outsource jobs to locations outside of the United States, while 5% said they do. Just 7% of the total surveyed reported that they plan to increase the level of offshoring they do in the next two years. Eighty-six percent of all those polled said they expect no change in the amount of offshoring they do and about 4% said they can foresee decreasing the amount of work they outsource to countries such as India, China or Mexico.

The IT staffing and consulting company polled some 1,400 CIOs, many of which worked at companies with less than 500 employees. Katherine Spencer Lee, executive director of Robert Half Technology, explained in a statement that the smaller the firm, the less likely it would reap the promised benefits of outsourcing.

"Smaller companies, in particular may lack the resources to commit to an effective long-term offshoring strategy," Lee said in a statement.

For instance, 11% of those companies polled that had more than 1,000 employees and another 11% of those with between 500 and 999 employees currently outsource jobs to other countries -- compared with the total 5% that said they offshore. And of those currently offshoring, 43% said they expect to increase services in the next two years, while 13% expect to cut back on offshoring.

Yet 8% of companies with 250 to 499 employees use offshoring and 3% of companies with between 100 and 249 employees said they send outsourcing jobs outside of the United States. Reasons cited for not offshoring include challenges managing offshore outsourcers and unrealized cost savings.