Offshore Outsourcing
Offshore outsourcing, orglobal outsourcing, refers to the practice of shifting IT development, support, and operations to other countries. In a trend similar to the outflow
of manufacturing jobs over a several-decade period, many firms are sending IT work
overseas at an increasing rate.
For example, Dartmouth professor Matthew Slaughter has noted that IT work
will move offshore even faster than manufacturing, because it is easier to ship work
across networks and telephone lines and put consultants on airplanes than it is to
ship bulky raw materials, build factories, and deal with tariffs and transportation
issues. Several years ago, the IT consulting firm Gartner, Inc., accurately forecast the
steady growth of offshore outsourcing, and predicted that outsourcing would evolve
from labor-intensive maintenance and support to higher-level systems development
and software design.
In addition to exporting IT jobs, many large multinational firms, including
Microsoft and IBM, have opened technical centers in India and other countries. Some
observers believe that India might gain as many as 2 million IT jobs in the next decade.
The main reason for offshore outsourcing is the same as domestic outsourcing:
lower bottom-line costs. Offshore outsourcing, however, involves some unique risks
and concerns. For example, workers, customers, and shareholders in some companies
have protested this trend, and have raised public awareness of possible economic
impact. Even more important, offshore outsourcing involves unique concerns regarding project control, security issues, disparate cultures, and effective communication
with critical functions that might be located halfway around the globe