Companies around the world recognize a need to concentrate on their primary business, outsourcing their IT operations to third parties. Running an own IT departments within a company means significant investments and proper management in order to satisfy requirements of the business in ever-changing technological and business environment, and to achieve an acceptable efficiency of IT operations.

Gartner analyst Frances Karamouzis in his report on IT outsourcing, released in April 2005, says that 30% of IT jobs in developed countries will be offshored by 2015, and outsourcing market will rapidly grow. In particular, the reports says that “…Offshore spending on infrastructure outsourcing will grow from between $100 million and $250 million in 2004 to between $3 billion and $4 billion in 2010… Offshore spending on application-development services will more than double from $23 billion to as much as $50 billion …”.

The other reasons that drive rapid grows of IT outsourcing market (this is also applicable to other types of outsourcing) are the following:

• standardization of typical IT operations, like system maintenance, testing
• it is difficult and costly to keep a specialized IT resource, skillful in modern IT technologies, in the company
• increased globalization in IT industry and availability of skillful IT resources in emerging countries like India, Russia, Ukraine, Belarus, eastern Europe, that allows easy communication between customers in US and Europe, and service providers in these countries
• ever increasing pressure on IT budgets and cost-reduction programs suggested by management and stock-holders of the companies, operating in the highly competitive markets

There is a clear recognition that the driving forces in IT outsourcing are speed to market and quality, not just cost of services. A new wave of outsourcing is allowing companies to quickly acquire reliable IT to deploy specialized services and to ramp down easily when those services are no longer needed. The dominant driver for outsourcing is moving from cost control/ reduction towards a more balance spectrum of drivers.

Apart from the obvious benefits that the customers are looking for when outsourcing their IT operations, there are some other benefits for the customers:

• re-allocation of resources released due to outsourcing to a more value-adding activity and reduce IT staff
• possibility to keep up company IT environment in line with the cutting-edge IT technologies, and therefore ensure high security and customers’ satisfaction
• almost immediate availability of qualified resources, and possibility to start the project very quickly.

According to the report “Offshore 2005 Research. Preliminary Findings and Conclusions” by Ventoro, the most common drivers to move offshore are (in the decreasing order of importance):

• Achieve Cost Savings
• Improve Quality
• Improve Time to Market
• Gain Technical Skillsets
• Forced Strategy
• Cost Predictability
• Penetrate Market
• Gain Industry Expertise

The results are based on the answers of 5,231 Executives across North America and Europe, who would generally be considered buyers of offshore outsourcing services.