A recent survey of 500 medium and large organizations in Western Europe undertaken by IDC suggests that although the offshore outsourcing model has captured the imagination, it has not yet managed to be translated into the wholesale transformation of the IT industry that has been predicted in the public prints. In fact, the survey showed that only 10% of European organizations are using offshore as a delivery model for IT services.
Significantly, the survey further shows that 80% of organizations would not offshore as a service delivery model, even for services that are considered core for the offshore value proposition, such as application development and application management.
The results of the survey also show that European organizations would prefer access to offshore resources through their existing service provider, rather than engaging with an offshore outsourcing specialist firm or by establishing their own offshore facilities.
“The fact that only 10% of organizations are using offshore for service delivery, and that an astounding 80% said that they would not consider offshore, clearly indicates that offshore outsourcing has managed to grab a lot more headlines than share of wallet,” says Marianne Kolding, research director, European Services. “The fact that organizations so clearly stated a preference for gaining access to offshore resources through their existing service providers rather than offshore specialists could spell a tough competitive situation for, for example, the Indian offshore service firms, unless they quickly manage to establish their brands and a critical installed base in Western Europe.”
IDC’s study, Behind the Hype: Offshore Outsourcing Fails to Capture Hearts and Minds in Western Europe (IDC #PR04L, August 2004), presents analysis of survey data on European organizations’ attitudes to offshore outsourcing. The data forms part of IDC’s annual European Services survey, conducted May to July 2004. The results provide a snapshot of attitudes and spending intentions for European organizations on the offshore service delivery model.