2003-11-24 11:54:34 UTC
Sunday, November 23, 2003 Posted: 11:09 AM EST (1141 GMT)
NEW YORK (Reuters) -- U.S. technology services market will double its usage of
low-cost countries next year, but much of the work will still be captured by
U.S. providers as they beef up their operations abroad, market research firm
The offshore spending component of the U.S. technology services market will
rise to 10 percent of the total spending, or $16.3 billion, in 2003. IDC also
expects offshore spending to more than quadruple to $46 billion, or 23 percent
of the total, by 2007.
Indeed, much of the U.S. services market growth, projected by IDC to be 6.1
percent a year, will ultimately be delivered by workers in countries such as
India, China and Russia.
In contrast, work being done domestically will increase merely 3 percent in the
next four years.
"The immediately reaction to this data might be to declare both demise of
United States-based vendors and a stagnant U.S. job market," Ned May, author of
the study, said this week.
"However, though the delivery of IT services will increasingly come from
offshore, much of the spending will continue to be captured by locally based
vendors who build up their offshore delivery resources," he said.
Last year India's top five technology firms generated more than $3 billion in
revenue, with the majority originated from the U.S. market, as cost-conscious
companies increasingly demand offshore component in every deal they sign, IDC
U.S. services companies, such as Accenture Ltd., Computer Sciences Corp.,
Electronic Data Systems Corp. and BearingPoint Inc. also experienced higher
outsourcing demand, though pricing pressure continues.
"They are all aggressively building their own global offshore capabilities,"
May said. "They will continue to be successful players."
The offshore sourcing trend will have the largest impact on maintenance and
support activities, with almost 27 percent of the market spending going abroad
In comparison, information technology education and training will remain
relatively resilient against the wind, the study said.