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Offshoring Isn't Such a Sure Thing

Resolving a dispute with that vendor overseas isn't always a walk in the park, a new survey finds
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Companies are finding that sending IT work overseas can be more trouble than it's worth, according to a new survey from DiamondCluster International, a Chicago-based management consultancy. The number of executives surveyed who said they were pleased with their outsourced IT vendors fell by 17 percentage points versus the previous year, marking the first decline since 2002. Moreover, early termination of relationships between buyers and offshore service providers spiked to 51%, which is double the rate of 2004.

Though reasons for unhappiness varied, delays in resolving customer issues were cited by 56% of all buyers. Yet despite the bad feelings, 74% of those surveyed say they plan to increase their level of IT outsourcing next year by reducing their domestic work force and increasing overseas spending. More than 200 global IT executives, cost-cutting continued each spending between $5 million and $500 million on outsourced IT services annually, participated in the survey, as did more than 200 IT vendors.

DiamondCluster's Tom Weakland predicts the demand will shift, however, from application development to maintenance and support. Weakland also believes that tech buyers will think twice about sending critical services abroad--at least for now.





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