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It has been a whole decade since CIOs began offshore outsourcing. Small bits of development work went overseas before then, but the practice didn not really pick up until CIOs found themselves short handed on Y2K code fixes. From that point on, it exploded.Happy with the work done on Y2K code in India and elsewhere, many CIOs again looked offshore when the economy tanked and they were forced to cut IT budgets.
But this phenomenon didnt kill the U.S. IT job. IT employment rose 6 percent from a year ago to reach 3.68 million employed this year, more than any other this decade, according to the mostrecent Bureau of Labor Statistics employment survey. IT unemployment was just 2 percent.
Offshore outsourcing will continue its march, and in a big way, but CIOs dont call it that anymore. Now its globalization, and despite earlier suspicions, this word really does mean more than a nice way to say dirtcheap software coding. It has a lot to do with companies themselves becoming more global in all aspects of their business.
For CIOs, this means that management of offshore outsourcing , globalization will increasingly fall in their hands. Ron Kifer, CIO at Applied Materials , tells that the companys enterprise managed services practice was created within his organization. Enterprise managed services under the CIO is becoming more typical, Kifer says. At Applied Materials, each of the business units decides what it wants to outsource, and Kifers organization maintains the vendor relationships. It makes more sense for IT to handle those relationships than any other department, Kifer notes, given the skills and components inherent to IT, even if it is businessprocess outsourcing stuff. Having IT handle it all helps a company consolidate vendors where it can, too, to achieve economies of scale. When we can aggregate USD 300 million to USD 400 million across three or four activities within the company, it can be very significant to those providers and influence the direction they take, and have them develop additional capabilities to our advantage, he notes.
Kifer adds that centralizing all sorts of offshore efforts within IT helps the CIO job, too. CIOs welcome the ability to lead anything that brings ROI back to the company and expands their role on the executive team, he notes. Yet not everyone in the business may like the idea. The challenge youll get is the fear or concern that IT will attempt to make decisions, about what to outsource or whom to outsource to, that take precedent over a business unit managers views, he notes.
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