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Follow on Google News | The world economic meltdown and IT outsourcing: truth and myths.TEAM International (www.teaminternational.com) reviews the findings of the most recent surveys on truth and myths of the impact of the world economic crisis on IT offshore outsourcing.
A recent survey by Forrester Research, Inc, the leading US research and consultancy agency, finds that while 46% of 268 Global 2000 companies have already cut back their IT budgets, only 21% have cut back their IT services spending. It generally means that companies, which currently invest in IT offshore outsourcing, will carry on with this trend during cost-cutting times. In addition to that, companies, that have never considered offshore outsourcing before, will have to do so in order to avoid investing in new expensive technology and adding head count. Despite reported slowdown in Q3, the year 2008 is still expected to outperform 2007 in terms of the offshore deals. According to InfoWorld, the number of contracts granted until now is up 5% compared to the last year, while the total contract value of the outsourcing deals is up 19%. The global outsourcing market is still predicted to reach $88 billion by the end of 2008. TPI, a sourcing advisory firm, does not see any reason why the current economic woes should negatively affect IT offshore outsourcing. TEAM International believes that the offshore outsourcing pattern utilized in 2008 will be repeated in 2009 due to the fact that the true value of offshoring and nearshoring still consists in improved process management and operational efficiency. Although a lot of rumors on the upcoming crash of the IT outsourcing industry are much exaggerated and do not match the reality, one fact is clear – the nature of offshore outsourcing will change. Buyers are expected to become more selective in seeking a partner and service providers will have to find better ways of containing costs while improving business. That is how IT outsourcing services suppliers will survive the worst economic crisis since the Depression. Sources used: InfoWorld , Forrester Research, Inc www.forrester.com # # # TEAM International is a U.S.-owned and managed IT outsourcing firm that provides offshore software development and configuration, as well as IT staffing and Recruitment Process Outsourcing (RPO) solutions. End
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