IT Best Practices for Financial Managers

Chapter 8. Globalization Trends in Offshore Information Technology

Kalyana Sundaram

Offshore or remote delivery of information technology (IT) tasks has been an effective practice for a number of years. This practice has matured into offshore-centric delivery of significant components of the entire development and support process. The U.S. demand for IT services is also driving the concept of specialized/focused IT work delivered offsite to many countries where the availability of IT talent and labor cost advantage make this economically viable. As a result, offshore IT is now multigeography; both the availability of IT talent and the labor cost advantage in these offshore locations are continuing to make offshore IT an essential consideration for businesses.

Strong growth in demand has fueled this trend. However, instead of just scaling into bigger and more geographically distributed delivery models, offshoring has morphed into something significantly different. The forces that shaped this transformation are different from the cost arbitrage that initially drove offshore IT.

In the technology industry, the current model of IT services is most commonly referred to as global IT delivery. Even though offshore IT was the genesis for global IT and continues to be a big part of it, there are several other aspects to global IT that make it worthwhile to better understand its value. There are two key business trends that drive global IT. Not surprisingly, globalization of business is one ...