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HOME >> OPINIONS

Put the World to Work

By Jonathan James

March 1, 2001 — (Page 1 of 3)
Why, according to a recent survey, are 40 percent of U.S. companies planning to engage in global applications outsourcing within the next year or two? It all boils down to supply and demand. The growth in Internet and intranet projects, the continuing drive to automate critical business processes, and the need to maintain legacy systems are all creating demand for IT professionals. Yet, the number of computer science graduates dropped 42 percent between 1986 and 1995. The result is that more than 400,000 technical jobs are vacant in this country's $300 billion software and services market, according to the Information Technology Association of America.

Global outsourcing has the potential to fill a substantial portion of this gap. A number of developing countries have invested heavily in technical education and can provide a ready supply of bright people at a relatively low cost. Infrastructure improvements in many developing nations, particularly in the area of telecommunications, and the fact that IT professionals tend to work independently, make it possible to bring this talent to bear on virtually any programming task.

Traditionally, the most active location for staging these types of IT initiatives has been India. A strong supply of English-speaking software programming talent, favorable government and tax incentives and a 12-hour time difference that complements U.S. time zones are some of the advantages that this country has to offer. American corporations appear to be taking notice. According to equity research firm Jefferies & Co., more than 185 Fortune 500 companies outsourced some aspect of their IT requirements to India in the 1999-to-2000 time frame.

How can you take advantage of the benefits of outsourcing without falling victim to the potential pitfalls? The first step is selecting the right business applications. The most appropriate candidates generally are large projects that have been defined to the point that they do not require day-to-day interaction between business and development teams. While many companies think of outsourcing first as a method of handling new application development, it's important to note that it has equal or greater relevance to maintenance and enhancements of existing applications. Many companies prefer to handle strategic initiatives with their internal IT staff, because they have greater knowledge of business rules, and outsource the maintenance of legacy systems. This approach has the advantage of maximizing the knowledge capital invested in individual professionals by enabling their dedication to maximum value-added activities.

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