Effects of Outsourcing on the IT Industry

With technology becoming the man focus in almost every aspect of life, including industries like banking, manufacturing etc, Information Technology or IT industry makes for one of the most sought after industries in the world. Like most of other industries though, even IT industry was hit by the economic slump or recession in the late 2000s. Today, even though the world is still recovering from the recession’s after-effects, IT industry is on a go again! However, the trend now is a bit different.

With everyone chanting the ‘outsourcing’ rhyme, IT industry too could not stay away from its charm. In fact, it was precisely due to the outsourcing trend that IT industry could recover that fast from the slow-down. In the present scenario, US has more than 500,000 IT-related jobs lying vacant because there are not enough qualified personnel to take up these jobs. How then can an industry grow if it lacks properly trained people? Outsourcing came as a natural answer! Several third world nations such as India and China bring out thousands of well trained engineers and IT personnel every year. With the abundance of skilled man-power available in these countries, it was obvious for the IT companies from more developed nations to shift their base. Not only is finding a skilled personnel easier here, but it is also costs less than their home country.

With technology changing every day, establishing proper R&D infrastructure, hiring trained staff and yet saving on the costs made outsourcing a better option. With BPOs ready to take on the task of hiring and managing workforce, IT companies could increase their performance manifold. Besides, customer satisfaction also enhanced through outsourcing. Getting latest technology too became a cost-saver, what with outsourcing of several processes requiring latest technology. Hence, companies would save on refurbishing their older technology every time a new version came.

Nevertheless, fears are ripe within the developed nations that the kind of outsourcing happening in the IT sector might ultimately affect the youth in their home nations itself. Since outsourcing curbs the number of jobs created, fears of unemployment become heightened. According to a report, more than 3 million IT jobs will be outsourced from United States to other nations by 2015. However, IT companies are of the view that cost saving, access to better technology and enhancement of company’s performance make for a better economy than lesser jobs.

It may hence be rightly concluded that amongst most other industries, it is the IT industry that has been most widely affected by outsourcing. While the developing nations are enjoying from the vast benefits of inflow of foreign currency, fears of unemployment are eating discussions within the outsourcing nations.