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Merrill Lynch predicts offshoring growth

But the company also finds that many chief information officers are planning to hire internal IT staff.

Tech work will be generated both onshore and offshore this year, according to a recent study by Merrill Lynch.

A March survey of 50 chief information officers from U.S. organizations found that 74 percent plan to hire internal information technology staff in the near term. That figure is up from 48 percent in the previous quarter.

Workplace blog

A recent report offers
a dizzying statistic
about the scale of
offshoring over the
next decade.

Even so, IT head honchos are planning to push more of their tech tasks to low-wage countries, according to the survey. Last year, the CIOs surveyed said, 0.9 percent of their budgets for IT services was spent offshore, a figure expected to rise to 1.1 percent this year and 1.6 percent over the next two to three years.

"However, we believe these results are understated (compared to the broader picture industrywide), as our survey includes government CIOs, who will not likely send work offshore," the report stated.

Merrill Lynch published the study Monday.

The job scene for U.S. tech professionals has been a mixed bag for a year or so. Staffing company Hudson recently said its index of IT worker confidence in the employment market rose in March amid greater job satisfaction, increased optimism about personal finances and a drop in anticipated layoffs.

In addition, the average number of unemployed workers in nine high-tech categories--including computer programmers, database administrators and computer hardware engineers--fell from 210,000 in 2003 to 146,000 in 2004, according to Labor Department data. And the U.S. economy added technology services jobs in March.

But the country also lost computer manufacturing positions last month. And that's not the only troubling news for tech professionals. A wave of mergers in the industry, such as the Oracle-PeopleSoft deal, is resulting in thousands of job cuts. The automation of technology tasks also is a threat to tech workers. And techies face the possibility that their to lower-wage nations such as India and China.

Business leaders defend offshoring as ultimately good for the U.S. economy and its workers. Critics of shipping high-wage work to lower-cost countries are concerned about job loss in the United States.