The average enterprise will offshore around 60 percent of its application work by 2009, according to IT research group Meta. The figure will reach that point after escalating by nearly 20 percent annually each year through to 2008.
The group released a report titled METAspectrum at its Outsourcing 2004 Conference in the US today stating that offshoring will continue to exceed outsourcing and that by 2005/06 "most IT organisations will have an 'offshore' strategy" in place.
Vice-president of Meta, Dean Davison, said that despite the efforts of domestic vendors to push "portfolio optimisation" as an alternative to the "global approach," offshore labour will continue to be a "disruptive alternative in the outsourcing industry".
"With global resources costing one-third to one-fifth that of American employees Ã¢â‚¬" without accounting for hidden costs Ã¢â‚¬" and having higher process discipline, offshore strategies now pervade North American IT organisations," said Davison.
According to Meta, the total offshore market is now worth over US$10 billion, with "several offshore outsourcing vendors now exceed US$1 billion in annual revenue". The company adds that the immediate growth in the market will stem from application development and maintenance.
"Offshore outsourcing provides access to worldwide resources otherwise unavailable to most enterprises," said Davison.
"Application development and maintenance constitutes approximately 30 percent of spending for the average IT organisation. Offshore typically reduces that expense by 30 percent, but introduces additional risks and challenges."