What offshoring is really doing to jobs

Five years after the potentially huge effects of IT offshoring surfaced, Diaz Research founder Iain Smith investigates the actual impact and what CIOs need to watch out for in 2008.


Although overseas outsourcing was at one time compared with corporate treachery, the pace of change has been slower than IT staff feared.

Experian: staff rewards

A highly innovative recognition scheme called Game On! has boosted IT’s ratings as a place that recognises its good performers. The Game On! online nomination process has led to no fewer than 178 people being rewarded through fun treats like a private skiing lesson, or a day driving at Silverstone. “One of the great things about this scheme is that instead of just telling our IT people what good performance is, we can now show them,” says Helen Webster, the HR manager involved. “How Jo on the helpdesk responded to a client problem: that is what we want. Or the response of a project team to a major setback: that is how we want people to behave.”

Vast amounts of IT work have been offshored but those made redundant have mostly been able to find new jobs. And IT pay has not been cut, though the favoured treatment meted out to IT workers in the 1990s is now just a dim memory. However, today’s IT functions are very different from before and one very big difference is in the profile and mindset of the onshore workforce.

Workforces are on average much older now partly because headcount caps have cut graduate recruitment to unsustainably low levels. Staff turnover is unhealthily low and many IT teams are stagnant. And the balance of power has moved to employers, many of whom, while not cutting pay, are giving modest pay rises while tightening up on employee performance standards. Finally, many workers in their fifties want to escape from all this but cannot because their options are limited.

The good news is, however, that we are turning a corner. One big change is that offshoring is no longer being demonised among all onshore IT workforces. In a recent survey of the impact of offshoring on onshore IT staff in blue chip companies, one company told us the impact on morale was “Nil to positive – it is part of our overall strategy and is seen as a defence against outsourcing.” Another company said: “There is a positive message about ensuring security of the roles internally by having more flexibility using external suppliers.”