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Many More IT Jobs Going Offshore
By Laton McCartney
Almost 160,000 jobs in IT will be moved to India and other low cost labor markets offshore in the next two years according to new research from The Hackett Group, a global strategic advisory firm.
"The recession is causing many companies to initiate hiring freezes and staff cuts at home and accelerate their use of offshore resources," says Hackett Senior IT Research Director Erik Dorr. Completed in Q4 2008, Hackett's study was based on information captured from 200 global companies.
Dorr says that roughly 50 percent of all companies surveyed are freezing hiring, cutting staff or doing both concurrently in both IT and finance. In total, he notes, over 350,000 jobs will be moved offshore by 2010, nearly half of them in IT. The remainder will come from finance, HR and procurement. By 2010, 1 in 4 IT jobs will be located offshore, Hackett believes.
"Initially the CEO and senior management are making the decision to move jobs offshore," says Dorr. "Once the decision has been made, the CIO, or in large corporations, the CIO's lieutenant, makes the decisions as to how to best allocate the company's offshore resources."
Here's a breakdown of some of the study's statistical findings courtesy of the Hackett Group:
Figure 1
Projected number of general and administrative and IT full time employees in Global 1000 companies that will be moved offshore by 2010:
Finance transactional: 160,000
HR transactional: 16,000
IT: 157,000
Procurement Transactional: 26,000
Figure 2
Percentage of total function that will be moved offshore over the next two years:
Finance transactional: 11.1%
HR transactional: 4.8%
IT: 9.7%
Procurement Transactional: 7.4%
Figure 3
Planned short-term IT responses to economic crisis.
Companies implementing both IT hiring freezes and staff cuts: 31%
Companies implementing IT hiring freezes: 19%
Companies implementing IT staff cuts only: 4%
Figure 4
Percentage of IT jobs offshore
2008: 15.4 %
2010: 25.1%
Figure 5
Annual reoccurring savings realized by moving IT jobs offshore for typical Global 1000 company.
2008: $9.6 million
2010: $15.7 million
* Source: The Hackett Group
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