One-third of firms set to offshore IT

Survey: More companies are looking at offshoring as a strategic move -- and there is no shortage of tax-friendly places looking to attract them
Written by Matt Loney, Contributor
Over 30 percent of companies are planning to offshore their IT infrastructure within the next 12 months, and the same number are looking into the idea, according to research released this week.

Interest in business process offshoring is also gaining more ground with 34 percent of the respondents planning to offshore some of their business processes in the next 12 months.

The survey of 145 executives by Indian-based outsourcer Wipro found that offshore outsourcing is increasingly becoming a strategic initiative at global organisations. At 38 percent of the organisations, offshore outsourcing was being handled at board level. An overwhelming majority of executives (87 percent) polled said that their offshore outsourcing spends would increase during 2004. On average, organisations are likely to increase their offshore outsourcing spends by 34 percent.

Dubai and the Isle of Man are two places that are putting particular effort into attracting offshoring business. Both say their low corporate and personal tax regimes, coupled with business-friendly governments which are able to tailor legislation to aid companies, set them apart from the crowd.

In June, the world's first outsourcing free zone was created in Dubai. Internet City's chief executive, Bin Sulaiman, said four banks -- two local, one regional and one international -- were planning to spin off their IT departments into outsourcing operations, so they can turn them from cost centres into profit centres.

On the Isle of Man, e-business minister Tim Craine is similarly hoping to attract businesses keen to take advantage of the tax breaks and other benefits - as many financial services and online betting operations have already done. "We're not part of the UK, which means we make our own laws so we can be inventive. Also, ministers here are easily approachable. It's easy for people to say they'd like such and such legislation," he said.

Craine said the island is currently negotiating memorandums of understanding with the UK, some Caribbean nations and others to allow regulated industries to operate from the Isle of Man in case of disasters -- whether that be a hurricane, terrorist attack or a plain old power failure.

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