Offshore services to become a disruptive force
Offshore services to become a disruptive force
While offshore outsourcing contracts represent a fairly insignificant proportion of the total amount of services outsourced by Australian companies, that is set to change, with offshore services set to disrupt the Australian IT services market.
That is according to analyst group IDC's "crystal ball" predictions for the Australian IT market through 2004.
"There is little doubt that offshore services will increasingly influence the direction of the Australian IT services market," states the report.
The report says that the timing on the types of offshore services that customers are looking to purchase, as well as the magnitude of the expected change over the coming year are uncertain. What is certain though, is that this issue does present a clear threat to the local IT services industry in the coming years.
IDC is also keen to stress though that the outlook is not as bleak as it is often portrayed, and that there is still much cause for optimism among local outsourcing vendors.
"Despite all the associated hype, the reality is that today less than 1 percent of the IT services market is delivered from offshore. Opportunities abound for service providers that can effectively position themselves to address the needs of the marketplace."
The report comes just days after disgruntled IT workers took to the streets in Melbourne to protest at Telstra's plans to outsource IT and call centre jobs overseas to places like India and China.
"The offshore issue is today being hotly debated by vendors, client organisations and government alike," the report states. "Enterprises are focusing on which vendors should be considered, the decision to use a direct or indirect model as well as identifying the criteria used to select a provider and the geographic preference. Vendors need to have a strategy in place, offer choice and be prepared for the race to build and embed global sourcing capabilities across their services portfolio."
IDC says in the short term there are two key challenges. First, vendors need to hire the right skills offshore while minimising the impact on employee morale in Australia. Second, vendors need to refine their global delivery framework to offer offshore as a seamless component for any new engagement.
"Regardless, 2004 will be a year where organisations debate and assess the viability of offshore services, making it a disruptive force in the local IT market," the report concludes.
Related Article: