Offshored software services to take off this year

At Inatech we like to keep an eye on the offshoring market, and this week comes more news about the levels of offshoring expected over the next year to year and a half. Last week we talked about what the budget would mean for outsourcing, and concluded that it was offshoring companies in non-EU states, such as India, that would feel the bite of the VAT rise.

Well, perhaps the predicted boost in offshored software services might help to take the edge of the VAT blow. New research from Vanson Bourne shows that 62% of UK IT directors are planning to offshore their software services over the next year to 18 months, or already doing so. Further, 50% of the 200 IT directors interviewed plan to prioritise the offshoring of maintenance for packaged software such as Oracle or SAP. Whilst the VAT hike for non-EU states may hurt outsourcing providers, the increase in business might help to reduce the pain.

Daniel Naoum is the co-founder of Valueshore Spain, the organisation that commissioned the research. He said: “Each country has its own specialist expertise and, with this in mind, companies should really consider outsourcing providers and regions with a proven track record in their industry.”

Many countries are currently trying to emulate India’s rocket to the top of the outsourcing market, leading to a new trend in outsourcing; multisourcing. This is where companies outsource various IT functions to the countries or areas that have the best reputation for each.

Meanwhile, outsourcing of other IT services is looking pretty promising too. 43% of IT directors interviewed will outsource their remote infrastructure management; 31% will outsource business processe; and 16% will be outsourcing their Business Intelligence functions. So, it’s good news for offshore companies and UK clients, and perhaps a blow for UK service providers.