The good news about outsourcing

Businesses are investing in human capital, new skill sets

by Robert Ebisch

Anyone who keeps up with the news knows that most experts believe that outsourcing makes good economic sense, even if it raises the ire of IT workers around the world. The workers in question often view outsourcing as a necessary evil—a step that reduces costs, but does so at the expense of domestic work forces.

That sentiment may hold true for U.S. IT insiders, but it isn't necessarily shared by companies in other countries that are embracing outsourcing as a way to retain a competitive advantage. In fact, Gartner predicts that "up to 25% of traditional IT jobs in many developed countries will be situated in emerging markets by 2010." Gartner also believes that by 2005, 30% of leading European businesses will include nearshore or offshore outsourcing in their business and IT plans. Even Japan is joining the trend, with more than 400,000 jobs expected to go offshore in 2004, according to Deloitte Research.

Despite the flood of jobs heading offshore, domestic IT hiring in many countries is experiencing a reawakening. A CIO magazine survey reported at the beginning of February that more than one third of CIOs were actively hiring IT staff, and another 26% planned to start hiring during the next six months. CIOs reported having an average of 13 open IT positions, up from seven as reported six months earlier.

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This evidence supports the idea that, while countries are seeing more IT jobs being outsourced than ever before, even more new jobs will be created. Forrester Research, for example, has projected that 276,954 U.S. IT jobs will be outsourced to other countries by the year 2010. Mean-while, technology industry development in the United States will dwarf that loss with the addition of some 2.26 million IT jobs, according to the U.S. Bureau of Labor Statistics.

Outsourcing is changing the emphasis in the kinds of IT skills needed in the work force. "U.S. companies will keep work here that requires close contact with the business: strategy development, business process improvement and the actual application of IT to the business," according to CIO magazine. The same is true for companies in any country; certain tasks must remain close to home in order to be done right and done well.

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In response to this need, businesses are increasingly investing in and looking for employees with highly targeted skills. Networking is seeing the greatest growth in IT hiring, according to a February survey by Robert Half Technology, with growing interest in hiring technicians skilled in Linux, security applications, .Net and business intelligence software.

Security management and administration is also an expanding IT skill market, according to Melanie Hollands, president of Aspen, Colo.-based Koala Capital, a hedge fund focusing on trading/investing in technology stocks. "More and more legal requirements are making this essential," she says. "It's also very difficult to outsource and virtually impossible to offshore because it requires an individual who is highly trusted and also requires somebody who can work directly with all employees on security programs."

Project management is another area where companies seem to be expanding their IT employee base, Hollands says. "Companies are realizing that even outsourced projects need to be managed from the inside by people who know what they're doing."

And then there's business analysis, requiring people who can work with business users and not just write code. "It's very difficult to outsource this well," Hollands says, "and even when this is outsourced, it usually requires local resources."

That's a lesson some industries are just starting to learn. Don't be surprised if some previously outsourced jobs are once again available to local workers. The takeaway for IT technicians is this: Continued education and training in areas such as business analysis and project management can serve as insurance during a time when jobs are anything but guaranteed.

Robert Ebisch has written for USA Today, Science News, The Washington Post, Consumers Digest and Wireless Review.