Organizations reluctant to adopt offshore outsourcing suffer from the 'fear factor', according to John Price, who heads up outsourcing provider NIIT Technologies in A/NZ.

Price also blamed a 'lack of awareness' about offshoring, when commenting on the findings of the 2006 State of the CIO report by CIO magazine, in which only 4 percent of local organizations listed India as their preferred destination for offshore outsourcing.

Of the 275 CIOs surveyed, 83 percent said they would not be going offshore for their outsourcing needs.

"Most businesses that are reluctant to outsource suffer from a fear factor," Price said.

"Ultimately it comes down to communication, [which] breaks down misconceptions about outsourcing."

NIIT Technologies CEO Arvind Thakur said there is even more fear around outsourcing infrastructure management, a market potentially worth $US80 billion.

Thakur said companies prefer to move application development and maintenance offshore, but this can be used as an entry point to infrastructure management outsourcing.

"Business should recognize the value in [using outsourcing] to move skilled staff from the back end of the business to the customer end," he said.

NIIT employs 3500 staff globally, with most based in New Delhi and about 70 located in Australia.

Thakur said by 2020, the favoured outsourcing destinations will include China, Russia and Israel.

As a result India will need to focus on education and undertake a "workforce retool".