Outsourcing Embraced In Europe As Well

By CIO Update Staff

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A result of global outsourcing trends, Gartner predicts that up to 25% of traditional IT jobs in many developed countries today will be situated in emerging markets by 2010. European companies in particular are beginning to embrace outsourcing as never before.

"Last year saw a phenomenon in Europe," according to Roger Cox, Gartner's managing vice president. "Out of 15 one-billion-U.S.-dollar mega-deals signed in 2003, 10 were awarded by Europe-based enterprises. Until 2003, Europe-based organizations had only signed a total of 14 mega-deals since 1989."

Gartner presented its analysis of outsourcing trends at its Spring Symposium/ITxpo in Barcelona, Spain on Tuesday.

Not All Outsourcing Going To India

In Western Europe, the UK is the largest and most mature market, representing 35% of the total European outsourcing market in 2004. Germany, Switzerland, and Austria account for 22.8% and France 12.8%. Italy and the Nordic regions represent 7.7% and 7.2% respectively, while Spain and Portugal have 4.6% of the total market.

By 2005, 30 % of leading European businesses will include near-shore or offshore in their business and IT plans, indicating offshore outsourcing is one of the most significant shifts in IT in the near-term.

Offshore contact centre industry and business process outsourcing represent the highest opportunity for growth.

However, while global sourcing enables companies to deliver higher levels of services at less cost, it also poses challenges and risks. Gartner said we will continue to see increasing backlash in connection with white-collar jobs moving offshore.

Global Sourcing Locations

India remains the undisputed offshore leader, with China and Russia continuing to emerge as strong contenders. Many other countries are eyeing the potential of providing offshore IT services.

Gartner said the 10 new countries joining the European Union in May will not challenge India or China in terms of size and number of IT professionals. However, these countries do have a part to play in Europe for near-shore outsourcing; they have distance, time zone, cultural and language connections in their favor. Hungary, the Czech Republic and Poland, for example, are likely to attract increasing attention from German companies.

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