• October 7, 2003
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

Who's Outsourcing IT?

Companies worldwide are outsourcing some or all of their IT functions, often to companies abroad, according to a recent survey by ITtoolbox. In an online survey of 612 IT professionals worldwide (most of which are decision-makers), 72 percent of participants revealed they are outsourcing several IT functions, with 14 percent outsourcing 50 percent or more of their IT functions. "The survey results confirm what people have been speculating about the trend toward outsourcing, especially the amount going overseas," says Dan Morrison, cofounder, CEO, and president of ITtoolbox. More than one third of participants, 36 percent, stated the top strategic reason for outsourcing was the lure of cost-savings, whereas 15 percent cited special skills and/or services as the top reason. Of the 31 percent of respondents who outsource abroad, 21 percent farm IT functions out to India. Some convincing reasons for outsourcing to Indian companies include a U.S. economic slowdown, prompting companies to consider India's lower cost regions with highly trained IT employees, as well as the ability to distribute IT work globally over the Internet, according to Morrison. The salary savings in India alone is compelling. The average IT salary for U.S. respondents is $80,286, whereas Indian counterparts are averaging nearly one tenth of that at $8,593, according to a separate salary survey by ITtoolbox. The salary survey reveals IT employees in India are getting substantially larger raises than their counterparts in the U.S.--more than 60 percent of IT employees in India are boasting annual salary increase of more than 10 percent. And, 10 percent of IT respondents in India claimed to be getting salary increases of more than 40 percent. In the United States 60 percent of IT respondents are receiving an annual salary increase of only 5 percent or less, the salary survey concluded. At this rate some might question whether Indian IT salaries would catch up with U.S. salaries. "We're seeing a trend toward that, but the gap is so large that it's difficult to anticipate when that will happen," Morrison states. The informal online survey recorded responses from small, medium, and large organizations. Nearly half of the respondents (45 percent) are from large companies with 1,000 or more employees, 23 percent are from midsize companies with 100 to 999 employees and 32 percent of the respondents are from small companies with less than 100 employees. According to Holly E. Jacques, marketing communications specialist at ITtoolbox, the majority of those organizations outsourcing are in large organizations.
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