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Over 40% of New Development Activity Is Now Outsourced, Says META Group

  • 13 November, 2003 10:49

<p>Over 40% of New Development Activity Is Now Outsourced, Says META Group
India Is Still Preferred Offshore Country; Also Gets Highest Turnover Rate</p>
<p>Sydney, Australia. (November 13, 2003) „o An average of 41% of new development activity is now outsourced, according to META Group, Inc. (Nasdaq: METG). Last year, the average percentage of new development from outsourcing providers and external contractors was 35.9% worldwide. Despite political instabilities in India and other parts of the world, more and more companies realise the strategic and financial advantages to using offshore resources for both programming and business processes, according to new findings from META Group¡¦s upcoming 2004 Worldwide IT Benchmark Report, which looks at IT trends in various industries across the globe.
¡§IT budget cutbacks have left IT managers little choice but to outsource if they are to get their development projects completed,¡¨ says META Group executive vice president Dr. Howard Rubin. ¡§IT organisations often use external resources ¡X such as consultants, contractors, packaged solutions, and outsourcing providers ¡X to augment and sometimes replace internal resources. Going offshore and using the economics of offshore outsourcing
have been the only competitive options left for larger companies since all the IT budget decreases of 2000, 2001, 2002, and even 2003.¡¨
There is a substantial increase in the use of outsourcing providers and external contractors for new development in both US and non-US companies. Offshore outsourcing is definitely up as offshore companies mature, providing cost-effective and high-quality services. These companies have found methods for mitigating risk and have compiled a substantial list of strong customer testimonials. India continues to be the preferred offshore country, with more than 500,000 knowledge workers, but other countries are competing ¡X Russia, the Philippines, Ireland, Israel, and China are the up-and-comers to watch.
Turnover rates for IT staff are decreasing both in the US and worldwide. US turnover is at 8.1%, down from 11.8%; worldwide turnover is at 8.2%, down from 11.7% last year ¡X such rates are to be expected when hiring is down because those who have managed to hold on to their jobs do not quit when the job market is depressed. Not surprisingly, India, the preferred offshore outsourcing country, is also the country with the highest turnover rate; Canada has the lowest turnover rate.
¡§There is no doubt that 2003 has been a terrible year for IT workers,¡¨ said Dr. Rubin. ¡§Staff cutbacks and the unavailability of new positions have sent many IT professionals looking for new career options. However, there seems to be better news on the horizon for 2004 ¡X we¡¦ve noticed a recent increase in internal hiring, which could be an early sign of a slow economic recovery.¡¨</p>
<p>About META Group
META Group is a leading provider of information technology research, advisory services, and strategic consulting. Delivering objective and actionable guidance, META Group¡¦s experienced analysts and consultants are trusted advisors to IT and business executives around the world. Our unique collaborative models and dedicated customer service help clients be more efficient, effective, and timely in their use of IT to achieve their business goals. Visit for more details on our high-value approach.</p>
Kirsten Davey
Markom Marketing
<p>Peter Carr, General Manager
META Group

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