Gartner Says One Out of 10 Jobs in U.S. IT Vendors and IT Service Providers to Move Offshore by End of 2004
STAMFORD, CONN., July 29, 2003 — As offshore outsourcing ramps up and the dislocation of IT jobs in the United States continues, CIOs must anticipate the potential loss of talent, knowledge and performance. By year-end 2004, one out of every 10 jobs within U.S.-based IT vendors and IT service providers will move to emerging markets, as will one of every 20 IT jobs within user enterprises, according to Gartner, Inc. (NYSE: IT and ITB).
"To many CIOs and business executives, the decision to outsource activities offshore is fiscally sound - the cost, quality, value and process advantages are well-proven," said Diane Morello, vice president and research director at Gartner. "At a time when IS organizations are struggling with poor credibility and IT is being scrutinized, offshore outsourcing is becoming a tool for improving service delivery and a source of highly qualified talent in greater numbers."
However, Gartner analysts said that CIOs and other business executives must not trivialize the impact of offshore outsourcing on their business strategies, their organization or their employees. Three areas of concern are loss of future talent, loss of intellectual assets and loss of organizational performance.
During the offshore transition, the degree of uncertainty is so high that it can severely disrupt organizational performance. CIOs and other business executives should hold themselves accountable for sustaining and improving organizational performance levels during the transition.
Gartner recommends CIOs and other business executives coordinate along several lines:
Identify competencies, roles, people and knowledge that will be retained - To prevent organizational paralysis, CIOs must define the future role and shape of their IS organizations as certain day-to-day activities move overseas. Many enterprises retain critical functions such as application design, application integration, client-facing process management, enterprise architecture, information management and high-investment competency centers. In addition, they develop new competencies in service management, vendor relationship management, process management and business integration.
Create a meaningful transition plan - Provide clear timelines and milestones to help people prepare for the change that offshore outsourcing brings. At each milestone, certain segments of work or applications will complete their offshore transfer, and the affected people will be terminated or redeployed. Companies that have a lasting commitment to their people will generally spend time arranging redeployment of their affected employees.
Outline employees' options - Define the options available for affected employees: reskilling, redeployment, termination or outplacement. Executives must hold themselves accountable for communicating clearly, quickly and meaningfully.
"CIOs need to communicate clearly, honestly and respectfully about the transition plan, and about the options available to affected employees," Morello said. "The way in which enterprises deal with employees during the offshore transition will be lasting testament to the perception of leadership and the reputation of the company as an employer."
Additional information is available in the Gartner research note U.S. Offshore Outsourcing: Structural Changes, Big Impact. This analysis examines how CIOs must react as the dislocation of IT jobs in the United States becomes real. It can be purchased on Gartner's Web site.
Another resource for information on how offshore outsourcing is affecting jobs is people3, a Gartner, Inc. company. people3, the world's leading authority on IT human capital, provides "people solutions" for IT organizations. Supported by seasoned human resources and IT consultants who understand the unique languages and issues of both the HR and IT communities, people3 helps its clients maximize the value of their most important investment, their people. people3, a Gartner company, is headquartered in Bridgewater, N.J. For more information on people3, please call 888-PEOPLE3 or visit the Web site at www.people3.com.
To keep up to date on the latest outsourcing issues, please visit Gartner's Outsourcing Web site at www.gartner.com/outsourcing. This Web site offers content, tools, products and services that are needed to make effective, strategic decisions around outsourcing. When browsing the site, users receive a breakdown of key outsourcing issues, industry trends and best practices for making smarter business decisions. This area also includes relevant research and links to Consulting and Measurement services. Custom Alerts are also available, enabling users to stay current on new research focused on their outsourcing agendas. Free copies of the Gartner outsourcing handbook, Outsourcing: The Real Deal, can also be ordered on the Outsourcing Web site.
About Gartner:
Gartner, Inc. is the leading provider of
research and analysis on the global information technology industry. Gartner serves more
than 10,000 clients, including chief information officers and other senior IT executives
in corporations and government agencies, as well as technology companies and the
investment community. The Company focuses on delivering objective, in-depth analysis
and actionable advice to enable clients to make more informed business and technology
decisions. The Company's businesses consist of Gartner Intelligence, research and
events for IT professionals; Gartner Executive Programs, membership programs and peer
networking services; and Gartner Consulting, customized engagements with a specific
emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in
Stamford, Connecticut, and has 3,700 associates, including more than 1,000 research
analysts and consultants, in more than 75 locations worldwide. For more information,
visit www.gartner.com.
