Offshore Outsourcing of IT Losing Popularity

Offshore IT outsourcing has taken a sharp downturn in popularity, according to survey results from Menlo Park, Calif.-based executive search and staffing firm Robert Half Technology.

A staggering 94 percent of participating CIOs responded that their companies currently are not outsourcing technology positions to firms outside the U.S. Further, 86 percent said they have no plans to change their level of IT outsourcing in the next two years. The survey was conducted by an independent research firm and was based on more than 1,400 interviews with CIOs from a random sample of U.S. companies with 100 or more employees.

But the news isn't all bad for offshore IT outsourcing providers. Of the 111 respondents whose firms currently engage in offshore outsourcing, 43 percent said their companies plan to increase their level of outsourcing within two years.

Among respondents whose firms previously had ceased offshore operations (61 respondents), the most common reason cited for doing so was that the operations required too much management and oversight. Additionally, 30 percent of these CIOs believed that they weren't realizing expected cost savings.

For firms that are exploring offshore outsourcing options, Robert Half Technology offers the following advice:

1. Look for stability. Choose a vendor that has a track record of retaining employees.

2. Consider set-up time and costs. New jobs or even departments may need to be created to handle vendor selection, manage contracts, train workers and oversee remote teams.

3. Anticipate management challenges. Offer training for managers who will lead overseas teams. Some companies may need a full-time project manager to oversee the offshore vendor.

4. Address security and privacy concerns. Intellectual property risks -- such as the enforcement of patents, copyrights and trade secrets -- may require additional oversight and resources.

Courtesy of Wall Street & Technology, a TechWeb property.