No More Outsourcing To India And China, US Is The New Destination

When you live in Russia everything about IT outsourcing is something you can not ignore as many people around you earn their money off IT services rendered to customers from abroad. And of course it is even more so for people in India and even in China: looking to cut development costs many companies turn to countries with cheaper labor to outsource certain parts of their business processes.

In the early days of the current financial crisis I thought that offshore outsourcing services would actually prosper in these conditions as companies will be looking for new additional ways to cut costs – and outsourcing development to countries where it is dirt-cheap sounded like an appealing option.

But many companies that have already had experience with offshore outsourcing to India or China may know that despite of the seemingly low prices it may actually turn into a very pricy endeavor for a company as really low prices often mean very poor quality as well and poor quality means continuous modifications and sometimes redoing the work from scratch when you can’t even use the results of the work you have already paid for.

So it now looks like many companies have learned this lesson well and the year 2009 will hardly be a prosperous one for offshore outsourcing: BDO Seidman has published results of its annual survey demonstrating plans of CFOs of 100 technology businesses in the US related to IT outsourcing. This survey proves that the US will be the most frequently considered destination while China and India with their 16 and 13 per cent respectively can hardly compete with 22% for the US.

As many as 62% of businesses rely on outsourcing for some parts of their processes but in the current financial climate there will hardly be any further growth in international outsourcing and a decline is actually likely. In addition to the economy, factors like Mumbai terrorist attacks and complicated international taxes prevent the technology companies from outsourcing more abroad – and they turn back to the US instead.

Of course this may sound like good news for companies working in IT outsourcing sector in the US and for the country’s economy in general – after all, it means keeping more money instead of sending this money abroad. But there’s also a factor of leaving all those developers in countries like China or India without work and this will certainly send people there to cybercriminal activity – and this is definitely not something I would want to see.