Outsourcing March 2006: Can an Anxious IT Organization Be Productive? - 'ZIFFPAGE TITLEFinding 1 '
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Finding 1: Spending on outsourcing is picking up at large companies. Outsourcing remains as widespread as last year, taking up about 20 percent of the IT budget. But while outsourcing spending is increasing by just 2 percent at small and midsize companies, it is growing at 5.4 percent at companies with over $1 billion in revenues. However, while most respondents express satisfaction with their vendors, outsourcing customers are less satisfied than they were a year ago. The outsourcing services that are most criticized are help-desk, security, infrastructure and project management.
Finding 2: Offshoring is growing in popularity, but satisfaction with offshore firms lags behind domestic outsourcers. The percentage of companies that offshore rose by about 25 percent in the past year. However, offshore outsourcers lag behind domestic outsourcers in satisfaction, value and earning their customers' trust. Not all offshore outsourcing is winding up in India. China, the Philippines and Brazil are becoming more popular outsourcing destinations, while many large companies are nearsourcing to Canada and, to a lesser extent, Mexico. Clearly, companies are finding greater value in diversifying their outsourcing portfolios.
Finding 3: Employees' fears of losing their jobs to outsourcing is a growing problem. In this year's survey, a higher percentage of respondents than last year report they are eliminating full-time IT positions as a result of offshoring. Not surprisingly, more IT executives also say their employees' fear of losing their own jobs is having a disruptive impact on their IT organizations. This is true even when companies are dissatisfied with their outsourcing vendors; IT staffers don't believe their company will stop outsourcing as a result. CIOs need to work harder and smarter about managing their staff when they outsource.
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