40% of Companies Expect to Outsource IT to China by 2010

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    Management firm DiamondCluster International has released results of an outsourcing survey from among 210 senior IT executives at client firms and 242 executives at service providers. I haven’t read the report yet, but here are some of the more shocking — shocking! — results, according to the press release:

    According to DiamondCluster International’s 2005 Global IT Outsourcing Study the number of buyers prematurely terminating an outsourcing relationship has doubled to 51 percent while the number of buyers satisfied with their offshoring providers has plummeted from 79 percent to 62 percent.

    “The blame cannot be heaped solely on the shoulders of providers,” said Tom Weakland, who leads the outsourcing advisory services practice at DiamondCluster. “Many buyers are now several years into at least one outsourcing relationship, but they still lack effective measures to gauge the success of their outsourcing initiatives, which are critical for knowing and getting what you want”…

    Other key findings…include:

    • 40 percent of buyers expect to outsource some IT functions to China over the next three to five years compared to eight percent last year;
    • 88 percent of buyers remain concerned about employee backlash, but worries about anti-outsourcing legislation and political pressure have waned;
    • Buyers report that the greatest risks of outsourcing include the increased complexity of managing relationships, reduced operational effectiveness, and lower quality of output from their outsourcing providers.

    You can download the 20-page PDF report here:

    http://www.diamondcluster.com/Ideas/Viewpoint/PDF/DiamondCluster2005OutsourcingStudy.pdf

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