- Forrester Councils
- Councils Overview
- log in
Posted by Stephanie Moore on January 13, 2012
Forrester clients are looking for more options when it comes to IT service and outsourcing providers, and there’s a new option available to them: domestic outsourcing.
For many years, India has been the answer for large companies that need to save money and increase their IT bandwidth. Indian vendors, in fact, revolutionized the IT services industry by delivering higher quality, lower cost services with a never-let-the-client-down mentality. Now, however, the market has “overcorrected” in terms of outsourcing IT work. Companies, whether they work with a pureplay Indian vendor such as Infosys or a US-based vendor such as IBM, have to buy the bulk of their programming talent from India.
Unfortunately, today, India is not the best delivery location for all IT work or for all companies.
First of all, India is overworked — some might even say tapped out. The excess demand for Indian labor has meant that clients are less satisfied with their offshore IT services:
Second, the role of technology in business is changing. To build technology solutions that drive the business, as opposed to just enable the business, technologists need to have more contextual understanding — so they understand, intuitively in some cases, what the business wants without the business having to specify it. That contextual understanding is very hard to get from a non-native. This means that clients spend tons of time trying to specify their needs so a non-native developer can interpret and build to suit those needs. As agility becomes increasingly important, this approach does not suffice.
Given all this, I was thrilled to be invited to the White House on January 11th to attend a summit on President Obama’s “Insourcing American Jobs” initiative — what, in my IT services and outsourcing world, I would have called a domestic outsourcing summit. You can read about the summit here [http://www.whitehouse.gov/the-press-office/2012/01/11/president-obama-issues-call-action-invest-america-white-house-insourcing]. I believe domestic IT outsourcing is a rising trend that has the potential to re-shape the way companies consider IT outsourcing. Domestic outsourcing is just what is implied by the name — the use of US-based resources to perform your IT services needs. The domestic outsourcing model transplants the offshore factory model to the US and uses local, contextually sensitive developers on the software assembly line so that clients do not have to spend so much time and money specifying their requirements in a way that can be interpreted by non-native programmers.
There are three reasons why this trend will be important to American businesses:
I must say, my unbiased analyst opinion is that IT jobs are coming back here and this transition will be at least as quick as the Indian software vendors’ rise to dominance. To be sure, India will still be part of the global outsourcing model — the big change is that the US will also be the dominant participant in this critical global industry.
Interested in this domestic outsourcing trend? Considering alternatives to India? Please leave a comment, and I’ll try to respond.
Save Money On Your Next Software Negotiation
Work with our software negotiation experts to save 10–20% on your next contract »
Lead BT Transformation
Develop customer-obsessed strategies to drive growth »
Forrester's CX Index
Predict how actions to improve CX will affect revenue performance.
Measure the customer experiences that matter most »