Innovation to drive outsourcing

Innovation not cost reduction will be the main reason successful firms outsource IT jobs over the next decade, according to analyst firm Forrester.

Forrester estimates that one million European and 3.3 million US service jobs will be offshored by 2015, but says firms are starting to use offshoring not just to save money, but also to tap into new pools of talent and to open up new markets for their services.

In the next decade, traditional offshoring locations, such as India and China, will also be challenged by new emerging skills and services from Russia and Eastern Europe, says the analyst firm.

'People are thinking if jobs are being offshored to elsewhere what are we going to do for a living? The answer is we will have higher level jobs where we innovate,' said George Colony, founder and chief executive of Forrester Research, speaking at the group's GigaWorld IT Forum Europe, this week.

'This [traditional offshore model] is a dead model, we are moving towards a business model based on innovation networks,' he said.

As lower value IT jobs go overseas business executives will be forced to innovate and create new companies, services and jobs, he says. This will lead to businesses moving away from a model where they protect their intellectual property and instead adopt 'global innovation networks' based on collaboration and partnerships - offshore resources will be utilised as part of this.

New cheaper software programming and other skills in other countries will also allow firms to weave together internal and external inventions and intellectual property, such as business processes, to generate new money making products, services and business models, he says.

'Open source software is a perfect example of an innovation network, where different skills and intellectual property has been shared globally,' said Colony. 'But some firms are struggling to accept the new business model. Bill Gates doesn't understand it, he thinks it's communism and because of that he's going to blow it.'