Offshoring captures growing number of IT projects

While most companies claim they would rather use local providers, almost one in six Australian organizations have outsourced IT projects offshore or are planning to, a new survey shows.

However, an IT industry body believes Australia has the potential to create thousands of new IT jobs and become a major destination for IT outsourcing.

The Australian Information Industry Association polled 100 IT decision makers from major companies and government agencies.

Releasing the results of the survey, AIIA CEO Rob Durie said the survey found both strong support for IT outsourcing and passionate resistance to it.

The survey indicates that 12 percent of organizations have completed an offshore project and a further 5 percent are considering one this year. Two-thirds of organizations considering outsourcing said they would prefer a local provider.

Although India was the most popular destination for outsourcing, Durie said he was surprised that developed nations such as the US, the UK, France and Canada were also major players.

"This indicates that if we can develop our capabilities and market them effectively, Australia can be a destination for offshore outsourcing," he said.

A focus on the quality and value of the local IT industry was needed to overcome the aggressive marketing and low costs of emerging rivals in Asia and Eastern Europe, he added, pointing out that both federal and state governments had a crucial role to play in developing the industry.

Most survey respondents (83 percent) want governments to provide tax and development incentives to encourage the local industry to keep jobs in Australia.

Software development and design are the most popular projects for Australian organizations engaged in offshore outsourcing. Cost saving tops the reasons for outsourcing, along with superior quality and proven success.

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