A massive wave of IT redundancies will hit Australian shores in the next few years with local vendor-based jobs moving to offshore outsourcing markets on a "substantial" scale, a senior Gartner researcher has warned.
Gartner EXP (Executive Programs) vice-president and research director, Andrew Rowsell-Jones, said tightening budgets and increasing performance pressures on corporate IT departments were increasingly forcing many Australian businesses to send their work to countries such as India.
Gartner currently clocks offshore outsourcing as the fastest growing segment of the IT industry with a compound annual growth rate of 29 per cent globally, predicting "mature market" countries like Australia and the US face "staggering" job losses.
The research firm said one in 10 vendor-based jobs now in the US would shift each year to emerging markets. Another one in 20 would migrate away from vendors to the user side of the enterprise.
Rowsell-Jones expected a "substantial" number of professional IT jobs to relocate offshore in the longer term, with contractors feeling the sharp end of the cuts.
"Unlike permanent staff, [organisations] tend to end their contracts more easily with contractors as there is less visceral effect in cutting back on them,"he said.
To cope, Rowsell-Jones said CIOs were employing models such as the 'flat forever strategy’.
"They don't continue to hire lots of other IT staff, but as the volume of work increases, they ensure they keep developing their existing in-house IT specialists with critical business skills such as vendor, outsourcing and client relationship management," he said.
The financial services industry was leading the pack in shifting employment to an offshore development partner, Rowsell-Jones said.
"That industry has substantial investments in IT and deep legacy issues dating back 40 years, thus it has been one of the earliest adopting sectors of offshore outsourcing," he said.
Meta Group analyst, Maria Schafer, backs Gartner's estimate of 10 per cent of US-based vendor jobs moving by the end of 2004, but rejected the notion that five per cent of corporate IT jobs would move offshore.
She described the the figure as "wildly high".
- Thomas Hoffman also contributed to this story.