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American IT on Diet

March 11, 2008

Lehman Brothers head of Global Outsourcing believes that American IT companies are on a diet but they still believe outsourcing will save significant cost. Key take aways are as follows,

  • IT investment has become strategic and necessary for the competitiveness of the firm’s business. Hence, it will continue to be built out, even in this environment.
  • Significant benefits (including costs) remain for offshoring because costs in India and China are still less than one-third of the costs in
    western countries.
  • Likely to offshore even large, complex projects and use the savings to invest more in new technology.
  • China fast emerging as an important alternate offshore destination after India due to lower costs, geographical proximity (to Japan and Hong Kong) and diversification of risks.
  • Do not see any change in our strategic outlook unless things become really bad and the firm wants to stop investments in IT.

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