CXO

New study says that offshoring is freeing up more money for new IT investments

Info-Tech Research Group has released the results of its study on U.S. IT spending. The Canadian researchers expects that IT departments will increase spending from $840 billion in 2006 to $884 billion in 2007, a rise of 5.24%. By 2010, Info-Tech expects spending to reach $1.033 trillion.

Key points

A few key takeaways from the study:

  • Business services, financial services, government, and manufacturing will be the four biggest sectors driving IT spending increases.
  • IT storage equipment and software will experience the strongest demand.
  • Of the $1.033 trillion in 2010, $625 billion will be spent on operations and $408 billion will be used for new acquisitions (purchases).
  • Many big companies are using offshoring to reduce operational costs and using the cost savings to invest more heavily in new purchases.

The offshoring effect

"The adoption of offshore outsourcing by large enterprises within U.S. industrial sectors has had a major impact on how their IT budgets will be allocated going forward," said Michael O'Neil, managing director, Info-Tech Research Group Indaba Division. "Clearly large enterprises can now focus on acquiring advanced technologies to enhance their bottom line productivity and profitability due to operational savings from outsourcing. Again, this is good news for high-tech equipment and solutions providers marketing to large U.S. firms."

Your take

Offshoring has been a dirty word in IT because it is often thought of in the context of programming and help desk jobs being lost in the U.S. and moved to India. However, this study says that offshoring is saving operational money that many enterprises are using to invest in new technologies. That is likely to create new, higher-level IT jobs in the process. How does this affect your opinion of offshoring? Have you seen any real world examples of this happening? Join the discussion.

About

Jason Hiner is Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He's co-author of the book, Follow the Geeks.

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