Offshore outsourcing on the increase

With research company IDC predicting a shortfall of 330,000 IT staff in the UK by 2003, IT departments are increasingly adopting offshore outsourcing, particularly for software development projects.

Rita Terdiman, a research director at analyst Gartner, claimed that benefits include the fact that "you get lower rates, and testing and encoding work doesn't need to be done onsite".

India is the world leader in providing such services, with 400,000 staff currently employed in software exports of different kinds, and a further 65,000 IT professionals qualifying every year.

Terdiman said that India's workers show a commitment to quality and are demonstrating increasing expertise in integration projects. However, she warned that finding experienced managers can be a problem as the best staff tend to leave India.

The second biggest country for providing outsourcing services is Ireland, but Gartner considers the UK's closest neighbour to be "tapped out" in terms of usage. Terdiman points to Northern Ireland, however, as an underused source of staff, alongside Israel and the Philippines.

And by the second half of this decade, she believes that China will emerge as a major provider of offshore skills.

A key trend in offshore outsourcing is the rise of development centres, particularly in India. A large user buys a set amount of work from an outsourcer over a number of years and, in return, receives a dedicated remote software development team familiar with its customer's needs.

However, the UK's relatively large use of staff from India is seen by some as a concern. Peter Dyke, a senior analyst at Winstone Consultants, said: "Governments should be training staff of their own. Much of the money earned by foreign workers leaves the country, which is bad economic planning."

"A country can only handle a certain amount of immigration before an industry becomes saturated and fails to support the economy," he added.