Three-quarters of U.S. companies outsourced some or all of their information technology activities in 2004, and that percentage is likely to increase this year, according to a special survey on outsourcing and offshoring, the Global Outsourcing Report, released yesterday by Horasis and Going Global Ventures.
While a smaller percentage of companies are outsourcing those activities offshore (32%), half of them have cut full-time jobs as a result.
India is the most competitive and popular technology outsourcing destination in the world in 2005, according to the Report, and China will be the No. 1 technology outsourcing country in 10 years.
The Global Outsourcing Report 2005 is the first-of-its-kind report to rank countries based on the opportunities, costs and risks they present for IT outsourcing, both now and in the future.
Outsourcing has become a supercharged issue, thanks to fears of job loss, but despite the political difficulties, the strategy can provide huge corporate benefits in terms of productivity, prices, profits and wages. But companies need to be able to assess the risks and benefits of each country they are considering as an outsourcing destination.
The Report was compiled by Frank-Jürgen Richter, President of Horasis: The Global Visions Community, a Geneva-based strategic advisory firm that develops scenarios related to issues of globalization and Mark Minevich, an international strategic advisor and principal at Going Global Ventures, a U.S.-based international consulting and venture advisory firm. A copy of the Global Outsourcing Report can be accessed online.
"The Report makes an important intellectual and practical contribution to addressing one of the most dramatic business trends in current history - outsourcing and offshoring - as we attempt to enact visions for a sustainable future," said Frank-Jürgen Richter.
"This report is a catalyst for identifying the next wave of winners in technology outsourcing, even before trends and problems can emerge," added Mark Minevich,
Twenty countries have emerged as the leading technology outsourcing destinations in 2005. China, Costa Rica, the Czech Republic and Hungary round out the top five countries. The Report predicts that in 2015 the top five outsourcing destination will be China, India, the U.S., Brazil and Russia.
Using two different indexes - the Global Outsourcing Index (GOI) and the Future Outsourcing Rank (FOR) - the Global Outsourcing Report 2005 contains an analytical country profile for each of the 20 economies in the study, providing a comprehensive summary of the overall IT outsourcing position. The ranking is as following:
1 India China
2 China India
3 Costa Rica USA
4 Czech Republic Brazil
5 Hungary Russia
6 Canada Ukraine
7 Russia Romania
8 Latvia Belarus
9 Chile Philippines
10 Romania Canada
11 Ireland Ireland
12 Singapore Malaysia
13 Philippines Armenia
14 Poland Chile
15 Brazil South Africa
16 Armenia Thailand
17 Bulgaria Vietnam
18 Ukraine Moldavia
19 Israel Mexico
20 Mexico Poland
The GOI is a weighted index made up of three separate ratings: the cost of doing business in each country; seven risk factors (including geopolitical, human capital, IT competency, economics, legal, cultural and IT infrastructure); and market opportunities.
The Future Outsourcing Index, which assesses the long-term (10 years) competitiveness of the top 3 0 future outsourcing countries, is determined from GDP growth, population growth, the quality of the labor pool and analysis from leading entrepreneurs, economists and other experts.
Horasis - The Global Visions Community