TotalCIO

Jan 27 2011   5:46PM GMT

Offshore outsourcing: China runs the sun, will it rule the cloud too?

Linda Tucci Linda Tucci Profile: Linda Tucci

Gartner came out with its annual list of the top 30 countries for offshore outsourcing. Despite my complicated relationship with lists (totally sucked in and deeply skeptical), I’ve found the Gartner lineup an interesting window on the global economy over the years. Vietnam, a “best-kept secret” just a few years ago, for example, is now a player, attractive for its English language skills and cultural affinity to the United States.(!!) In Russia, where the former Communist regime fostered a seemingly bottomless pool of brilliant computer scientists and mathematicians, the entrepreneurial class now driving IT outsourcing just wants the government to stay out of its way. Mexico leads the Latin pack, despite the escalating drug violence there.

Per usual, the Stamford, Conn.-based consultancy divides the world of offshore outsourcing into three parts: Americas; Asia/Pacific; and Europe, the Middle East and Africa — EMEA, for short. I’m writing a story on who’s in and who’s out. Spoiler alert: Seven developed countries you know well are off the list. The booting of the seven stalwarts notwithstanding, the general outlines of the offshore outsourcing world really don’t change much from year to year. India is the undisputed leader in offshore IT outsourcing, with China at its heels.

But as Gartner analyst Ian Marriott pointed out to me in our interview about the top 30, a game-changer is looming: cloud computing.

As more IT work is driven through the industrialization of computing, the cheap labor that is such a compelling reason to ship IT work offshore, of course, matters less. Automated work potentially could be done from anywhere, including the United States. That’s a dynamic that will affect the IBMs and Accentures of the IT provider world, with their huge investments in India, as well as the indigenous offshore providers.

As customers map their IT needs to a global economy, offshore providers will need to anticipate not only which services will be needed, but also how much of the work is commoditized and thus potentially could come from anywhere, Marriott said. Some providers will take the niche route.

“We’ll see them looking to build very focused skills, customized for the marketplace,” Marriott said.

As for who will rule the cloud, he’s betting on China to leverage its manufacturing and process capabilities to become a world force in industrialized IT. Soon. Look at what China has managed to accomplish in solar power. Unlike language skills, which can take a generation or more to improve, technology improvement can happen fast. American tech titans, are you listening?

Write to me at ltucci@techtarget.com.

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  • Shadow4412
    I've been in Information Technology for more than 24 years. I've seen jobs sent Off-Shore in all areas not just I/T for the purpose of saving money. The sad thing is more often than not the amount of money that companies actually save is minimal. To be realistic if American companies would stop sending jobs Off-Shore and bring jobs back to our great country our whole economy would change, their sales and profits would increase because people would be back to work and could afford their goods and services. I had worked for the same company for over 13 years where I had started as a Programmer/Analyst and eventually worked my way up through the ranks to a position of Regional Infrastructure Manager. That company like many others decided that it was costing them too much to maintain the staff of 35 to 40 people across the country to support their facilities and went Off-Shore which ended up costing them more money, slower response to issues, and made many of their staff outside of I/T very unsatisfied with their jobs and the lack of support they were getting. Let's find a way to put America back to work and build ourselves back to be the great nation we once were.
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