IT jobs brought back to UK as offshore IT savings erode

by Editor 9/18/2008 2:41:00 PM
Six percent of organizations plan to bring offshored IT jobs back to the UK over the next 12 months, according to a recent study conducted by ReThink Recruitment.

The study also reveals that 75 percent of IT departments will not send any more IT jobs offshore in the next year and only 19 percent of them are considering further offshoring at this point.

ReThink analysts explain this by saying that the wage inflation in overseas IT centres has eroded companies' cost savings, while at the same time concerns such as data security and quality control became more important.

“For every three IT directors thinking about sending work offshore, there is one planning to repatriate jobs to the UK,” says ReThink director Michael Bennett. “That’s quite a significant number, and clearly shows that offshoring is no longer a one-way street.”

“A lot of organisations saw offshoring purely as a way to cut costs, but spiralling wage inflation in offshore locations, combined with the project management cost of co-ordinating teams across international time zones, can eat into any cost savings,” he continued.

“IT directors increasingly accept that the UK has other competitive advantages which offshore destinations do not possess. For example, it is usually much easier to resolve disputes with outsourced suppliers in the UK than in emerging markets, where legal systems can be far less effective.”

When the management of IT functions was handed over to an outsourcing partner, the risks became significantly greater, according to ReThink.

“Many of the large UK banks that have made a success of offshoring established their own operations overseas, which are directly controlled from the UK. Handing over vital IT functions to an independent third party entails significantly greater risks,” concludes Bennett.

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