IT Outsourcing a Small Percentage of Overall Jobs

December 10, 2003 ( - Only 5% of Fortune 1000 companies have implemented full-fledged outsourcing programs, suggesting the flood of jobs moving overseas may be more like a trickle.

Even the number of companies looking to move jobs overseas, approximately 25% to 30% of Fortune 1000 firms, is relatively small. And these “experimenters,” as the authors of the study at Forrester research dub this group, only spend about 1% to 5% of their IT budgets on these endeavors, according to a NewsFactor report.

From there, the number of companies committing themselves trends downward to 5% to 10% of the Fortune 1000 that spend only 30% of their IT budgets overseas. Finally, the outsourcing budgets culminate at the “full exploiters,” fewer than 5% of Fortune 1000 firms, that spend roughly 40% to 50% of their IT budgets on projects located on foreign shores.

The reason for the relatively small impact is the bottom line, Forrester research found. If you run a good IT shop, and you have the processes in place – as well as the management and discipline to actively manage the outsourcing – the savings can be as much as 25% to 40%,” Forrester researcher John McCarthy told NewsFactor . “If you don’t, you can give back another half of that.”

Additionally, Forrester points out that outsourcing is fairly labor-intensive process and many companies have enough problems in their own technology departments to worry about outsourcing concerns. In fact, 60% of the Fortune 1000 falls into a group labeled by Forrester as “bystanders,” those not spending any resources offshore. “For many companies trying to get a grip on managing what’s happening downstairs, moving part of the operation a half a world away isn’t realistic,” McCarthy noted.

Forrester is not sayingthere is no trend to move some operations offshore. Rather, the authors of the story attributes much of the hype to media outlets overplaying the rate that positions have actually been shifted to foreign soil.