Overseas IT Outsourcing Rates Low Among CIOs Surveyed



    Eight of 10 Polled Executives Don't Expect to Increase Levels by 2009

    TORONTO, Jan. 28 /CNW/ - Despite the attention focused on the outsourcing
of technology jobs overseas, a recent survey by Robert Half Technology shows
that the majority of Canadian companies are not engaged in the practice.
Eighty-five per cent of chief information officers (CIOs) surveyed said their
company does not outsource information technology (IT) jobs outside of Canada.
    The study, developed by Robert Half Technology, a leading provider of
information technology professionals on a project and full-time basis, and
conducted by an independent research firm, is based on telephone interviews
with 270 CIOs across Canada.
    CIOs were asked, "Does your company currently outsource technology jobs
outside of Canada (i.e., do you engage in offshore outsourcing)?"

    
    No ......................................................... 85%
    Yes ........................................................ 12%
    Don't know .................................................  3%
                                                                ----
                                                                100%

    These percentages appear unlikely to change significantly in the near
future, as most survey respondents expected a continuation of the status quo.
    CIOs were also asked, "In the next two years, how will your company's
level of offshore outsourcing change?"

    Increase ................................................... 11%
    Decrease ...................................................  1%
    No change .................................................. 80%
    Don't know .................................................  8%
                                                                ----
                                                                100%
    

    "Challenges such as language, culture and time-zone barriers can
sometimes outweigh the potential benefits of outsourcing," said Katherine
Spencer Lee, executive director of Robert Half Technology. "Smaller companies,
in particular, may lack the resources to commit to an effective long-term
offshoring strategy."
    Lee further explained that many companies are keeping IT functions
in-house to preserve the close collaboration that helps build nimble work
teams. "IT professionals are taking on more complex roles that require
frequent interaction with colleagues outside the department, including company
executives. Hiring managers seek professionals with strong communication
skills and business acumen, who are able to collaborate with technical and
nontechnical coworkers and customers alike."

    
                   Large Companies More Likely to Outsource
                   ----------------------------------------

    The survey shows that large companies (those with 500 or more employees)
are much more likely to engage in overseas technology outsourcing than small
ones (those with fewer than 500 employees). In companies with 500 to 999
employees, 19 per cent of CIOs reported that they currently engage in
outsourcing, compared to 12 per cent overall.
    CIOs were asked, "Does your company currently outsource technology jobs
outside of the Canada?" (responses by company size):

    Company Size                             Percentage outsourcing offshore
    ------------                             -------------------------------
    1000+ ................................................ 16%
    500-999 .............................................. 19%
    250-499 ..............................................  9%
    100-249 .............................................. 12%
    

    "Researching viable vendors, and teaching them about the company and its
products, management style and quality control require a substantial
investment," Lee said. "Large companies may be better positioned to absorb the
costs of both initial setup and ongoing oversight, and to benefit from
economies of scale."
    In the near future, growth in offshore outsourcing is likely to come
primarily from companies already outsourcing, not from those that are new to
the practice: 55 per cent of respondents from companies that currently engage
in offshore outsourcing said they plan to increase their level of offshore
outsourcing in the next two years, versus 1 per cent who said they expect
levels to decrease.

    
                 Management Requirements and Other Elements
                 ------------------------------------------

    According to Lee, companies that have engaged in offshore outsourcing in
the past but discontinued the practice have done so for a number of commonly
cited reasons, including overly burdensome management requirements, unrealized
cost savings and quality control.
    For firms contemplating offshore outsourcing, Lee pointed out some
strategies to consider:
    -   Look for stability. Choose a vendor that has a track record of
        measuring staff turnover and retaining employees. Seek a company that
        has a succession plan in place, as well as defined career paths for
        their IT professionals.
    -   Setup time and costs. New jobs or even departments may need to be
        created to handle vendor selection, manage contracts, train workers
        and oversee remote work teams.
    -   Management challenges. Dispersed IT work teams may require a
        different level and type of oversight from management. Consider
        offering training for managers who will lead overseas teams and will
        likely be managing individuals who may be very different from them,
        in terms of culture, background and experience. Some companies may
        find that they need a full-time project manager to oversee the
        offshore vendor.
    -   Security and privacy concerns. Intellectual property risks such as
        the enforcement of patents, copyrights and trade secrets may require
        additional oversight and resources. Benchmark best practices in the
        areas of security and proprietary technology, for example, from
        similar companies that have done it successfully.

                               About the Survey
                               ----------------

    The study was developed by Robert Half Technology, a leading provider of
information technology professionals on a project and full-time basis, and
conducted by an independent research firm. The study is based on more than
270 telephone interviews with CIOs from a random sample of Canadian companies
with 100 or more employees. In order for the study to be statistically
representative and ensure that companies from all segments were represented,
the sample was stratified by industry and employee size. The results were then
weighted to reflect the proper proportions of employee size within industry.

                         About Robert Half Technology
                         ----------------------------

    With more than 100 locations in North America, South America, Europe and
Asia, Robert Half Technology is a leading provider of technology professionals
for initiatives ranging from web development and multiplatform systems
integration to network security and technical support. Robert Half Technology
offers online job search services at www.rht.com.

    EDITOR'S NOTE: To schedule an interview for local commentary in Toronto,
    Ottawa, Calgary or Vancouver, please contact Jason Chapman at
    416-350-8143, extension 62070.
    




For further information:

For further information: Robert Half Technology, Jason Chapman, (416)
350-8143, extension 62070, jason.chapman@rhi.com


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