Study: IT outsourcing fears misplaced

Research by IDC suggests that the tech services industry will continue to depend on offshore labor, but also that the overall impact will be less of a threat than thought.

Market research firm IDC on Thursday predicted that offshore activities of the U.S. information technology industry are set to rise dramatically over next four years but that the rise may not affect U.S. jobs in ways some industry observers feared.

The Framingham, Mass., research firm surveyed IT vendors and found that lower operation costs will continue to drive the offshore component of their businesses, which is set to rise from 5 percent in 2003 to 23 percent in 2007.

Services tasks that may be affected by offshore outsourcing include maintenance and support, implementation and operations--activities that IDC views as requiring low skills and that involve repeatability. Hardcore business work such as planning, IT education and training will remain relatively resilient against the offshore trend.

IT outsourcing to locations such as India has been criticized in the United States because of fears about the potential loss of technology jobs.

But IDC analysts said the debate is misplaced.

"Much of the spending to date has focused on only a few activities, which limits the impact of offshore on the broader market," Ned May, program manager of worldwide services research at IDC said in a statement.

"While there will be a migration of some jobs overseas, it will be coupled with steady growth in a number of service activities on U.S. soil," he said.