Offshore Outsourcing: A Country Too Far?
Published on Jan 1, 2009
· DOI :10.1057/9780230240841_5
The Yankee Group estimated the 1994 global IT outsourcing market as exceeding US49.5 billion with an annual 15% growth rate. As at 1995 the US market was the biggest; estimated to exceed S18.2 billion (Patane and Jurison, 1994). Offshore outsourcing formed a very small part of this growing outsourcing phenomenon. Its main appeal up to this date had been in the systems/software development area, and resided in four critical factors: low salaries in foreign countries, access to a larger group of trained professionals, reduced cycle time for systems development, and improved access to global markets (Ravichandran and Ahmed, 1993. For subsequent developments see also Chapters 14 and 15). As such, offshore outsourcing by this date would seem to have been mainly a response to the need to contain costs (though, according to the research by Sobol and Apte (1995), the median cost saving in 1995 needed to be 30% to make offshore outsourcing attractive). A further factor would seem to be dissatisfaction with the quality and speed of software/systems development in the developed economies.