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Gartner: Economic Woes Will Increase Offshoring
Research firm Gartner is predicting that the current economic downturn in the United States will mean that more IT and development positions will go overseas.
In a summary of the report, "Offshoring IT Services Can Cut Costs: Options for a Potential Economic Downturn," Gartner analyst and Vice President Allie Young commented, "In the best case scenario [a short-term downturn], buyers will aggressively seek cost-saving measures by accelerating offshore delivery or, for first time users, moving IT services to offshore locations."
In the case of an extended downturn, Young predicted that "buyers will aggressively move toward offshore destinations and service providers that can offer a global delivery model to access lower-cost IT labor for routine IT work that must continue for the business to operate."
Another Gartner analyst, Arup Roy, agreed, saying that "Organizations are likely to conclude that increasing the proportion of work to offshore locations is the best way to reduce labor costs, among other benefits."
"In most sectors, the watchword is caution," Roy continued. "IT budgets have not yet been cut, and offshore services options are being considered or accelerated as a prudent step to contain labor costs."
The study was released by the India-based arm of Gartner last month. It indicated that India will most likely continue to be a lead choice for outsourced services, despite "the recent appreciation of the Indian rupee and rising wage rates."
The study is available here.
About the Author
Becky Nagel is vice president of AI for 1105 Media, where she specializes in training internal and external customers on maximizing their business potential via a wide variety of generative AI technologies as well as developing cutting-edge AI content and events. She's the author of "ChatGPT Prompt 101 Guide for Business Uses," regularly leads research studies on generative AI business usage, and serves as the director of AI Boardroom, a new resource for C-level executives looking to excel in the AI era. Prior to her current position she was a technical leader for 1105 Media's Web, advertising and production teams as well as editorial director for a suite of enterprise technology publications, including serving as founding editor of PureAI.com. She has 20 years of enterprise technology journalism experience, and regularly speaks and writes about generative AI, AI, edge computing and other cutting-edge technologies. She can be reached at [email protected].