Once again, everything is about to change ­ and this time, the analysts might be on to something.

After years of worrying about on-the-ground implementations, chief information officers are heading for the skies. Cloud computing, says Gartner, represents a business evolution “no less influential than e-business”.

The analyst suggests cloud computing is difficult to define ­ a difficulty which apparently signifies the potential of the concept.

Gartner then manages to contradict itself by neatly supplying that previously unattainable definition for cloud computing: “Where massively scalable IT-related capabilities are provided as a service using internet technologies.”

Behind all this hyperbole and contradiction, the analyst does make some good points.

First, the coming together of virtualisation, service-oriented architecture and the internet is creating a new opportunity to reshape the relationship between IT and the business.

Second, such convergence means users can focus on the value of the service, rather than how systems are implemented or hosted.

Which really does mean everything is about to change -­ for everybody. Take IT managers, who will be able to act with more flexibility, introducing technologies and processes to meet the demands of line-of-business executives.

Such executives will be able to make requests for new technologies without fearing in-house implementation costs are likely to make the project prohibitive.

Even more pertinently, the availability of online services will provide more opportunities for user development. Beyond creating simple macros in Excel, users will be able to create code through a range of internet-provided systems.

Where does such user control leave IT programmers? Probably in India, creating cloud computing applications for the ever-increasing UK service economy.

Finally, traditional vendors will be left to fight against a new breed of online specialists that provide tailored business services.

Gartner suggests cloud computing remains an evolving concept. Despite the hype, the impending sense of change is overpowering.

Further reading

• Simon Pitt to lead IT at the Environment Agency
• CIO concerns: Rob Fraser switches Boots for CSC
• CIOs will need to transform to survive
• Career moves: Robin Terrell is John Lewis web MD
• Modernise to beat IT and skills obsolesence

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Want to contact the writer? Email Mark Samuels

More than 60 per cent of IT professionals believe outsourcing code increases the likelihood of hacking. In fact, 55 per cent believe it is far safer to write programs internally, according to a survey from Fortify Software.

Which is fine - but you can only write code internally if you haven't already outsourced most of your IT department. And with increasing amounts of grunt work - such as development and testing - being outsourced, IT professionals can only do so much internal work.

In fact, the survey suggests as much as a quarter of companies outsource application development, but do not specify security processes or technologies to ensure the security of outsourced applications.

So, the firms are probably asking for trouble - especially as the survey also suggests as much as 81 per cent of companies believe their systems are vulnerable to hacking.

Further reading

• Take a risk on innovation and you might just win
• The buck stops with boss on IT security
• McAfee spam project smells like marketing guff
• Time to focus on the good in databases
• Security technology is not a priority for firms
• Stop buying illegal software, or face the risks...

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Want to contact the writer? Email Mark Samuels

I've just written a news story for Computing that demonstrates how the UK is among the most expensive locations for onshore outsourcing.

The research from analyst Datamonitor demonstrates how contact centre provision in Western Europe and the United States is pretty expensive. But the UK price per agent per hour is among the most costly, due mainly to a lack of suitable talent. As Peter Ryan, head of contact centre outsourcing analysis at Datamonitor, suggests:

"Many vendors cite an inability to find contact centre agents of a high calibre and are frustrated at their unwillingness to stay in their role over an extended period of time. The result is an erosion of margin or higher costs being passed back to the client."

Yet another reason for IT managers to look to offshore locations, then - and Datamonitor suggests Colombia, Philippines and India are among the most competitively priced destinations.

Further reading

• Multisourcing means megadeal decline, says Gartner
• The future of outsourcing is outcome-based, says TPI
• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

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Want to contact the writer? Email Mark Samuels

Further evidence that businesses are eschewing large service deals in favour of multiple deals with many providers. Experts (see Further reading, below) have already pointed to an upward trend in multisourcing - the use of several outsourcers to maintain services.

And now analyst Gartner points to the decline of megadeals, contracts with a value of more than $1bn. Ten outsourcing megadeals were awarded last year, a decline from 12 in 2006.

Kurt Potter, research director at Gartner, says the decline can be partially explained by the fact that outsourcing is now seen as business as usual in many companies - and users are looking at many different methods for service delivery:

“Many providers are pursuing smaller contract strategies as a consequence of the new market realities, new competition and natural market pressures toward commoditisation, which reduces per-unit pricing. These strategies are often in the form of pursuit of smaller contracts from larger clients, or larger contracts from smaller companies."

Other facts from the research include:

• In terms of megadeal total contact value, the total for the 10 megadeals in 2007 was $12bn, the lowest level reported during the last eight years, with the closest level being that of $20.3bn in 2001
• Average contract value (ACV) of megadeals also continued to decrease, from an average of $2.6bn in 2006 to $1.2bn in 2007
• Of the 2007 outsourcing total, Gartner said megadeals represented 39.4 per cent of the contract value and only 6.8 per cent of the number of total contracts in 2007, down from 7.4 per cent in 2006
• Although deals with less than $50m in contract value continued to increase and reached 39.5 per cent of the total number of contracts, they only represented 3.3 per cent of toal contract value for 2007

Further reading

• The future of outsourcing is outcome-based, says TPI
• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

Want to subscribe to this blog? Click here for the options

Want to contact the writer? Email Mark Samuels

Another day, another set of trends in outsourcing. Market consolidation and new destinations are the key issues in external service provision, according to recent attendees at the the European Outsourcing Association summit.

Research at the summit, undertaken by the National Outsourcing Association, suggests globalisation will lead to one of the major Indian providers acquiring a large European or American firm. Three quarters of outsourcing specialists questioned at the summit believe an acquisition is imminent. Other key findings include:

• Consolidation is earmarked as a rapidly increasing industry trend by 68 percent of respondents
• Continental Europe is no longer as protectionist about outsourcing and offshoring - both are now accepted business practices
• Different nearshore locations, particularly Romania and Bulgaria, have brought a new attractiveness to the European offshoring market. As much as 59 per cent of respondents believe Romania and Bulgaria are now more attractive
• But respondents also believe Eastern European nations do not have the scale of staff to resource behemoth outsourcing deals, with the majority (58 per cent) believing different geographies are suited to different types of outsourcing projects.
• Only 17 percent believe Indian providers are leaps and bounds ahead of all other locations

Further reading

• The future of outsourcing is outcome-based, says TPI
• The next big thing in outsourcing?
• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

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Want to contact the writer? Email Mark Samuels

Computing reported last week that UK IT is in danger of losing skilled technology professionals overseas. Research from recruitment specialist Computer People suggests almost two-thirds of IT workers are looking for employment opportunities outside the UK.

Good luck and all that, but I would hazard a guess that there is a big difference between looking for overseas opportunities and actually finding work.

The first problem is that an increasing amount of nuts and bolts IT work is being offshored to Asia. Maybe Indian and Chinese firms will poach the top UK talent to work on IT projects, in a similar way to dot com firms in turn-of-the millennium California?

Don’t get your hopes up. While best practice theory suggests firms should only outsource technology on a quality basis, most businesses also outsource work to keep prices down.

Prices are unlikely to be kept low if specialist UK workers are imported from high-paying western economies. Cost-pressured firms across Europe and the US are also unlikely to be shelling out top dollar for global talent.

Information Week’s annual US IT salary survey shows the average wage for a technology professional has dropped for the first time since the dot com crash, from $74,000 (£37,000) in 2007 to $73,000 (£36,500).

Of course, some movement for highly-prized expertise is likely to occur. Fast-developing IT centres such as Dubai are expected to create some demand for IT workers. The Computer People report also suggests staff with Cobol skills are best rewarded, with an average annual salary of £41,870.

Computer People’s managing director Nick Dettmar says the IT industry consists of professionals who know they have sought-after skills. I am not so sure. Despite the promising pay rates, only the bravest of souls would become a Cobol specialist in today’s web-obsessed IT market.

Rather than specialising, UK IT professionals will need to be flexible because of the increasing desire for businesses to create on-demand solutions.

Such flexibility might mean working overseas. But it is more likely to include working across an ever-widening array of technology areas.

Further reading

• How can the CIO gain respect for IT innovation?
• Making best use of Gartner's reports
• CIO concerns: Rob Fraser switches Boots for CSC
• CIOs will need to transform to survive
• Modernise to beat IT and skills obsolesence

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Want to contact the writer? Email Mark Samuels

Today's earlier post moaned about risk aversion creating a lack of innovative IT. Well, you can't get innovative IT without funding - and Lloyds TSB Corporate Markets has appointed a new director to work with technology-based businesses who turnover in excess of £15m.

Michael Bavington - formerly a service contract specialist with the Hanover Financial Group - has been recruited to help IT companies raise funds using their assets. Bavington will be responsible for providing structured debt and lease funding to the bank's customers, particularly financial institutions and firms operating within the outsourcing sector.

Vasgen Edwards, managing director of Lloyds TSB Corporate Asset Finance, says Bavington's appointment will strengthen opportunities for funding: "He has developed considerable expertise in the key areas of origination and funding, and his specialist skill set will make a valuable contribution to the team."

Further reading

• Making best use of Gartner's reports
• CIO concerns: Rob Fraser switches Boots for CSC
• Career moves: Robin Terrell is John Lewis web MD
• Career moves: Steve Markwell is new NCC CEO
• Career moves: Carl Powell becomes Unipart CEO

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Want to contact the writer? Email Mark Samuels

I'm currently editing an article by Duncan Aitchison, managing director of outsourcing advisory firm TPI. With a cup of Incisive Media coffee at my side, I am a panning the copy - so to speak - for golden nuggets of best practice advice.

The general theme of the piece is change - the outsourcing market has changed, and will continue to change further. Long gone are single supplier deals, where one user trusted its systems with a single service provider.

As has been pointed out regularly during the last six-or-so months, more and more companies are entering into multisourcing deals, where firms can benefit from the expertise of niche providers IT in specific business areas.

And times will get tougher for service providers if they are not alert to further change. In the future - and largely as a result of the current credit crunch, Aitchison expects IT managers to base more outsourcing contracts on the ability of service provider to meet pre-determined targets:

"As outsourcing matures, IT managers are looking for value and a more defined business impact from their outsourcing relationships. Businesses are seeking more than transactional cost savings and incremental service improvements, much of which can be more simply achieved through offshoring," he says.

"We, therefore, expect to see a shift away from input-based contracting to productivity driven deals based on outcome-based pricing. As contracts mature and service providers demonstrate their capabilities, more sophisticated outcome-based pricing may be tied to the vendor’s ability to provide productivity improvements."

Tough times call for tough talking from IT managers, I guess.

Further reading

• Top contact centre outsourcers revealed
• The next big thing in outsourcing?
• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

Want to subscribe to this blog? Click here for the options

Want to contact the writer? Email Mark Samuels

Former Boots IT chief Rob Fraser has joined services specialist CSC as the firm's vice president of retail, technology and consumer business - a move that raises some important questions.

Fraser's beat will cover UK, Ireland and the Netherlands - and he will report to Nick Wilson, president of CSC’s Northern European operations.

"With technology becoming increasingly more important in the consumer industry, understanding the customer and helping to shape and develop services that enhance the client experience will be key to my role," says Fraser, who began his IT career in 1985 at Marks and Spencer. He then held business management roles at Lafarge Redland Aggregates and Andersen Consulting, before joining Boots in 1997.

Back in November, Computing Business ran a couple of pieces about Fraser's departure from Boots. Writer Joe Devo suggested the move should be seen in the wider context of other transformations, specifically a potential move away from the CIO title at major UK organisations:

With their decisions to drop the title of chief information officer (CIO) or IT director from their boards, the new owners of Boots and House of Fraser prompted suggestions that the end is nigh for boardroom technology leaders and that, just maybe, there is no longer any room at the top for today’s crop of IT leaders.

Sources have suggested the work of Boots’ former IT director, Rob Fraser, came to a natural end. After a six-year overhaul of the company’s IT systems, a decision was made to drop the role of IT director.

Fraser is clearly not the first IT leader to make a move to 'the dark side'. For example, John Worth, CIO at financial services specialist Prudential, took a partner role at consultant Ernst & Young a couple of years ago.

But decisions to move into IT provision, rather than implementation, suggest an interesting trend: what is the explanation?

• Is an obsession with the alignment between technology and business underplaying the role of IT?
• Do some IT leaders believe the room to lead change at blue-chip organisations is limited?
• Are CIOs losing their power in relation to finance directors?
• Or is it a case of more opportunities, and better terms and conditions, in the service sector?

The answer for many over-stretched and under-appreciated CIOs is probably all the above - and a bit more, too.

Further reading

• CIOs will need to transform to survive
• Career moves: Robin Terrell is John Lewis web MD
• Career moves: Steve Markwell is new NCC CEO
• Career moves: Carl Powell becomes Unipart CEO
• Modernise to beat IT and skills obsolesence

Want to subscribe to this blog? Click here for the options

Want to contact the writer? Email Mark Samuels

Good customer service and high quality standards might be the key to successful contact centre provision, but identifying the outsourcing specialists capable of excelling in such areas is a challenge.

Helps comes in the form of a new report from researcher Datamonitor, which reveals the top contact centre outsourcers globally. The report assesses nine suppliers across three dimensions, which include client satisfaction, services and technologies, and market impact. The result is a classification of firms that IT managers should shortlist, consider and explore:

Shortlist: Teleperformance, TeleTech, Sitel, EDS, Convergys
Market leaders - and the research indicates the five companies have sufficient levels of market impact to provide the stability needed for long-term relationships. Each firm has varied and sophisticated provision, across vertical markets in multiple geographies and languages. Each of the companies is strong across various contact centre services.

Consider: Minacs and Sykes
IT managers should examine each company to assess whether they will be able to meet their exact needs. The research notes that while each firm performed relatively well in terms of client satisfaction, market impact scores were lower than shortlisted candidates. In addition, specialisation in particular functions or verticals is seen as potentially limiting.

Explore: ICT Group and Stream
While both have demonstrated leadership, Datamonitor’s research indicates Stream’s focus around technical support may lessen its chance of winning contracts in other functional areas. In the case of the ICT Group, its low market impact score, coupled with limited capabilities in languages, means potential concerns when bidding for global contracts.

Further reading

• The next big thing in outsourcing?
• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

Want to subscribe to this blog? Click here for the options

Let us look back and yearn for the days when technology management was plain and simple ­ – you either managed systems in-house or outsourced technology to an external service provider.

Such simplicity is now very last millennium and technology leaders are bombarded with sourcing options. But which trends are simply created by hype-loving industry analysts and marketing specialists?

Well, to start with there was standard IT outsourcing, where non-core technology operations are managed by an external supplier.

The term IT outsourcing dates from the 1980s and was complemented in the mid-1990s by business process outsourcing, when users began to externally manage white-collar, management functions.

Then, a few years ago, technology leaders began to doubt long-term contracts with suppliers that were not always providing value for money. Benchmarking led to contract cuts and the return of service provision in-house ­ – insourcing.

At the same time, suppliers from overseas started to offer deals to users that were looking to outsource IT and business processes. For UK businesses, overseas contracts were either managed nearshore ­ – in Europe, for example ­ – or offshore, through an Indian or Chinese supplier.

And during the past year, external service management has become messy, with value-seeking users selecting a broad range of contract types from different providers.

This approach to provision has been widely termed multisourcing, which everyone says is the future of outsourcing, because users now need to be smart and ensure specialists are covering each part of the business. But you can guarantee multisourcing will be the next big thing in outsourcing… until something bigger comes along.

Forrester Research is already complicating ­ – or attempting to explain, depending on your point of view ­ – the sourcing mix by referring to the growth of “activist outsourcing”. Here, users aim to boost IT performance by managing the full lifecycle of each supplier relationship.

In the end, many of the trends are merely different flavours of the same product ­ – outsourcing. It is your decision whether such trends provide clarity or are simply used to push more products to users.

Further reading

• Offshoring means Western IT industry is "dying"
• UK firms love offshoring - what about the staff?
• Outsourcing and the lack of skilled UK IT workers
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

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I wrote recently about the historic importance of UK IT - stating that the inherent talent of home-grown technology professionals is all well and good, but if Chinese firms continue to dedicate 50 per cent of their workforce to R&D, the UK’s lead in innovation will soon disappear (see Further reading, below: China is the home of R&D, not outsourcing).

Computing recently reported that researcher Library House has revealed that venture capital investment in Europe’s next-generation media technology sector took a nosedive at the end of last year, falling 52 per cent in just three months.

At the same, the government’s trade and investment arm, UKTI, wants a national strategy for marketing the IT sector overseas to boost UK firms’ international business and attract inward investment. The IT sector represents 6.4 per cent of UK GDP, second only to financial services at 7.5 per cent.

With the commitment to R&D from Chinese firms and a potential recession in the West, now is an ideal time for government and business to help guarantee the UK’s position at the heart of global innovation.

Full column here: The UK must react to Chinese R&D threat

Further reading

China, innovation and outsourcing:

• China is the home of R&D, not outsourcing
  
• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

On UK R&D and the need to boost innovation:

• Forget the downturn and fight for innovation
• Don’t be afraid to be an IT innovator
• Innovate to impress the boss
• UK innovation needs private sector help
• Raise a glass to innovation partners

Want to subscribe to this blog? Click here for the options

What is the IT department actually responsible for? It seems technology experts are increasingly keen to suggest responsibility for IT should pass to "the business" (seen End Note).

Take data quality - which sounds to me like a core IT issue. No, says Gartner analyst and research vice president Ted Friedman: “Data quality is a business issue, not an IT matter, and it requires the business to take responsibility and drive improvements." Friedman suggests a marketing specialist could act as a data steward and keep marketing data "complete, correct, consistent, honest and not redundant".

Or take service oriented architecture (SOA) - which is a complex issue at the best of times and certainly involves a great deal of data and integration. Once again, "the business" is key, says IDC research manager Jan Duffy: "The lines between IT and business are so blurred that they almost don't exist when it comes to adopting something like SOA."

I could go on - comments about "the business" needing to run technology and technology being part of "the business" are pretty much ten-a-penny. But are such sentiments get out of jail cards; basically a simple method for explaining away a complex issue?

Go on, do a random search for a CIO interview. I bet it says something in the vein of: "the business needs to run IT". Good luck to the business, I say. But where do such practices leave the IT organisation? Especially once all the basic coding tasks have been offshored around the world.

End Note - "The Business" is a turn of phrase that makes me sound like I'm trying to create a parody of Hale & Pace - which I'm not, because:

• I have never watched the Hale & Pace comedy show, but I have had the dubious pleasure of having to listen to idiots quote bits from their TV shows, like "the business"
• And I had not thought about Gareth Hale and Norman Pace for about ten years until they appeared briefly on last year's Extras Christmas special - and until now, when I wrote "the business"

Further reading

• CIOs will sacrifice IT contractors in downturn plan
• The end of computer science?
• Is studying computer science a waste of time?
• Don't study IT if you want to be a CIO
• The adventures of a technology career

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New year, new Computing Business - that's the magazine I edit that provides some of the inspiration and content for this blog, in case you didn't know. The next edition is being prepared at the moment, like a well-loved and well-oiled machine.

Part of the focus is on chief information officers (CIOs) - how they should prepare for the changing nature of economic conditions and how their preparations might help improve business efficiency.

Mark Raskino, research vice president and Gartner fellow, says he thinks the timing with the story angle is "spot on for CIOs". And responses from industry experts are mixed, to say the least: improve service levels; increase outsourcing; cut contractors; and cut projects with marginal returns.

Tough choices are going to have to be made that will upset a lot of IT workers, seems to be the general call. But it is not all bad news for CIOs, says John Proudlock, transformational director at Vertex Financial Services:

"If the employment market softens, then this may be an opportunity for a few key hires that can reduce dependency on expensive contractors, while really strengthening your department, getting it in better shape for when the upturn comes."

Sounds good for the internal team - but what about contractors? Are freelance IT staff set to be the sacrificial lamb, as technology leaders attempt to improve business efficiency in 2008? Looks like, as ever, when the going gets tough, its better to have a permanent position...

Further reading

Skills issues:

• UK firms love offshoring - what about the staff?
• The end of computer science?
• Is studying computer science a waste of time?
• The adventures of a technology career

Leadership issues:

• It is time for CIOs to shape up or ship out
• CIOs will need to transform to survive
• Gossip and scandal will make you a top CIO
• Business change means nothing is certain for CIOs

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Sometimes the figures just don't match the hype. Take outsourcing to China, for example. Despite the current high profile of the country as a key global sourcing destination (see Further Reading links below), just 5 per cent of leading UK IT organisations are currently using China as base for offshoring, according to independent advisory firm EquaTerra.

So much for China as the new home of outsourcing - especially when you consider 100 per cent of UK businesses currently offshoring all or part of their IT functions are using India as one of their locations.

China, then - to paraphrase Edwin Starr, what is it good for? Well, absolutely lots of things, most notably research and development.

A recent survey by the European Commission found Europe’s research and development spending has been declining since 2000, standing at just 1.9 per cent of GDP ­ and almost half the rate devoted to research investment in China.

Want company-specific examples? Well, Computing - in the guise of editor Bryan Glick - recently took a trip to China, investigating research at Huawei, a manufacturer of telecommunications and networking equipment for customers such as BT, Vodafone and Telefonica. The following example illustrates how Huawei is able to take advantage of lower labour costs to invest big-style in R&D:

Huawei invests 10 per cent of its revenue in research and development (R&D) ­ a comparable proportion to Western IT providers. But lower staff costs make such spending levels deliver more than the firm’s rivals, says Huawei’s chief marketing officer Xu Zhijun.

“Our revenue this year will be about $11bn (£5.3bn), so our R&D investment will be about $1bn (£483m). In absolute amounts we are not investing as much as other big players, but R&D expense lies mainly in people costs," he says .

“If you look at our labour costs in R&D, China’s average is only about one-sixth that of the US and Europe. So Huawei’s $1bn (£480m) investment in R&D will amount to $4bn (£1.93bn) or even $5bn (£2.42bn) in the US or EU.”

To back up the claim, Huawei can point to a remarkable statistic: 48 per cent of its 62,000 employees work in R&D ­ that’s more than 30,000 people, a workforce percentage that no Western firm could possibly match.

Blimey, 48 per cent - where does that leave UK innovation? How can we compete long-term with China, especially when UK plc spends just 1.9 per cent of GDP on R&D?

The historic importance and inherent talent of UK IT professionals are all well-and-good. But if China carries on dedicating 50-per cent of its workforce to R&D, the UK's lead in innovation will soon disappear. Which is pretty discouraging.

Time, then, for the government and the private sector to step up to the plate and guarantee the UK's position at the heart of global IT R&D.

Further reading

China and outsourcing:

• 2008 - The year of multisourcing and offshoring
• Gartner reveals top 30 offshoring destinations

On UK R&D and the need to boost innovation:

• Forget the downturn and fight for innovation
• Don’t be afraid to be an IT innovator
• Innovate to impress the boss
• UK innovation needs private sector help
• Raise a glass to innovation partners

Want to subscribe to this blog? Click here for the options

Robert posted a rhetorical question on my blog yesterday. It's a good one too - check it out: "Why don't we just accept it: IT, in the West at least, is a dying industry. It's not glamorous, it's not sexy and it's not desirable. In case anyone thinks I'm overreacting, how many of the staff at Computing would recommend IT to their own children. This is not a rhetorical question, by the way: I really do want to know."

Actually, it's not a rhetorical question - as I previously stated - and I apologise. So, in an attempt to find an answer to Robert's poser, I turned (literally, to my left) and asked Computing editor Bryan Glick for his thoughts: "There's still lots of interesting jobs in the UK IT industry," he said. "But I wouldn't recommend a career as a code cutter - not unless you want to go and work in India."

And there's the rub, I guess. Grunt work - for want of a more glamorous term - is being shifted all round the globe. Take Romania, for example, which along with other Eastern European countries is becoming an outsourcing hub for Western European financial services firms and customer support:

• Consultant McKinsey says outsourcing to Eastern Europe trebled over the past three years to hit $2bn
• Outsourcing is also predicted to grow faster than anywhere else during the next four years (30 per cent compared to 25 per cent in other regions), according to analyst Gartner

Growth continues unabated too. Today, outsourcing provider WNS opened a new delivery centre in Bucharest that will provide multi-lingual services in French, German, Italian and Spanish for a range of users. So much for UK IT, eh?

But I guess we're still king of the senior technology position - right? Not according to the aforementioned Robert, who suggests IT leadership jobs are also at a premium:

"I'm in my mid-forties. In any of the professions, such as law or medicine, my career would now be approaching its peak. Unfortunately, I'm in IT, so that just makes me old and past it. However, my escape strategy is in place: I'm back at university, studying with a plan to Do Something Else."

Good luck with the Do Something Else, mate.

Further reading

• UK firms love offshoring - what about the staff?
• 2008 - The year of multisourcing and offshoring
• The end of computer science?
• Is studying computer science a waste of time?
• Don't study IT if you want to be a CIO
• The adventures of a technology career

Want to subscribe to this blog? Click here for the options

The debate is over - well at least until the next survey is released. Rather definitive looking results from independent advisory firm EquaTerra reveal that 100 per cent of UK businesses currently offshoring all or part of their IT functions are using India as one of their locations. And you can't get more than 100 per cent, can you?

Actually you can: surveys sometimes say spending rose by 204 per cent, for example. And that's not possible (I think), because a percentage is a way of expressing a number as a fraction of 100. So when researchers say spending increased by the aforementioned 204 per cent, I think they're just being mathematically lazy.

Anyway, I digress from the main point - which is that UK companies love outsourcing. Check out the following facts from the EquaTerra survey:

• Global sourcing is rapidly becoming an essential business option for UK firms, with a significant increase in organisations utilising near or offshoring within the last year - up from 47 per cent to 57 per cent
• Outsourcing generally is also still increasing in the UK, with 54 per cent of firms questioned planning to up their activity in 2008. Only 9 per cent predicted they will outsource less
• Real dissatisfaction with outsourcing is rare, occurring in only 14 per cent of the contracts evaluated

The EquaTerra research also illustrates that although cost is the primary driver for many organisations, more than half of firms (54 per cent) are now outsourcing for other reasons, such as availability of skills, flexibility and quality of work. Which is bad news for UK IT professionals, according to Phil Morris, managing director of EquaTerra Europe:

“Business people are making the decision to outsource to India because they can’t find the same resources in the UK."

As has been discussed on this blog recently (see further reading list below), with a significant UK IT skills gap - and more firms choosing to fill lower level technology positions with overseas talent - where will the next generation of technology managers come from?

Isn't the technical level the breeding ground for future chief information officers (CIOs)? And if not, is it really too outrageous to believe that current chief information officers - operating under increasing financial and skills pressures - will search also offshore for talented IT managers, as well as technical staff? I think the passion for outsourcing means that you should all watch your backs.

Further reading:

1. Outsourcing and the lack of skilled UK workers - http://knowledge.computing.co.uk/2007/12/outsourcing-and.html
2. UK firms offshore IT management to fill skills gap - http://knowledge.computing.co.uk/2007/12/firms-offshore.html
3. Where next for offshoring? - http://knowledge.computing.co.uk/2007/11/where-next-for-.html
4. Gartner reveals top 30 offshoring locations - http://knowledge.computing.co.uk/2007/12/gartner-reveals.html
5. TPI locations for offshoring - http://knowledge.computing.co.uk/2007/11/where-next-for-.html

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Analyst Gartner predicts the global outsourcing market will grow at a steady pace of 8.1 per cent in 2008 - and such growth will be driven by multisourcing and offshoring.

Publicly reported IT outsourcing and business process outsourcing contract values decreased overall by 50 per cent last year. Gartner says more firms are using a multisourcing strategy that includes a range of smaller deals that are not reported in the press.

Such results correspond with outsourcing advisory TPI, whose partner Duncan Aitchison told me recently that he expects multisourcing to increase in popularity as any remaining hesitancy surrounding offshoring subsides because of an increasing requirement to source specialist workers (see link 1 at the end of the post).

Gartner also says users are moving work to lower-cost, offshore locations. Indian providers gained business in 2007 and are growing approximately 40 per cent annually in the United States and 60 per cent annually in Europe. And although spending on offshore services is three times higher in North America than in Western Europe, the gap is closing.

Again such results correspond with TPI - in 2007, India-based service providers won more than 24 per cent of all the deals on which TPI advised, up from an average of 13 per cent during the previous four years (see link 2). Despite Indian dominance, Gartner expects other countries to emerge and challenge Indian providers in 2008.

Ian Marriott, research vice president at Gartner: “Strong demand is putting a strain on the available Indian labour force, while staff attrition and cost increases remain high. Global companies continue to accelerate their demands for a presence in countries other than India, and providers are seeking to expand their geographic footprint of delivery centres accordingly. More-sophisticated buyers are seeking a multi-country strategy to minimise risk and align nearshore and offshore delivery centres with their primary time zones. Although India's offshore revenue will continue to grow, the country's share of total offshore spending will decline slightly in 2008.”

Gartner recently revealed its top 30 locations (see link 3) for offshore services, many of which it expects to challenge India - with countries such as China, Russia and Brazil providing increasingly credible alternatives:

• Americas - Argentina, Brazil, Canada, Chile, Costa Rica, Mexico and Uruguay
• Asia/Pacific - Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam
• Europe, the Middle East and Africa (EMEA) - the Czech Republic, Hungary, Ireland, Israel, Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine

Aitchison, meanwhile, lists a collection of countries that have been been keen to join the offshoring bandwagon: Argentina, Uruguay, Philippines, Russia, Ghana, South Africa and Mauritius. Despite such interest, Aitchison told me India stills wins on every offshoring dimension (see link 4) – probably because of the high level of English skills.

The conclusion? If you're thinking of buying external service provision in 2008, you would be well-advised to buy a compass and to also seek the advice of a trusted analyst. With new countries and providers entering the fray, users will find outsourcing an increasing challenging proposition.

Further reading:

1. Outsourcing and the lack of skilled UK workers - http://knowledge.computing.co.uk/2007/12/outsourcing-and.html

2. Where next for offshoring? - http://knowledge.computing.co.uk/2007/11/where-next-for-.html 

3. Gartner reveals top 30 offshoring locations - http://knowledge.computing.co.uk/2007/12/gartner-reveals.html

4. TPI locations for offshoring - http://knowledge.computing.co.uk/2007/11/where-next-for-.html

UK IT faces a Catch-22, according to Sam - an individual that recently posted a comment on this blog. Sam was responding to Duncan Aitchison, partner at outsourcing advisory specialist TPI, who says demand for bulk IT skills is depressed locally and that UK IT professionals should migrate towards management skills. Sam is not convinced by Aitchison's theory:

• He believes that as firms outsource technology work, fewer UK workers enter IT, which in turn causes a shortage
• Such shortages mean firms need to outsource more technology work, which inevitably leads to fewer and fewer people entering UK IT
• But Sam also believes UK technology workers cannot become management workers without first acquiring more basic, heavy-lifting IT skills

And therein lies a significant problem - with a significant UK IT skills gap, where will the next generation of technology managers come from?

The escalating skills crisis in the UK IT industry is growing five to eight times faster than other sectors and the sector needs 150,000 new entrants each year.

Many students have already realised the futility of studying computer science, with the number of students choosing IT-related degrees almost halving from 27,000 to 14,700 between 2001 and 2005. Mathematics and computer science also have the highest university dropout rate in the UK.

Over to Sam, again - who summarises succinctly, from his point of view, the intractable nature of the challenge: "Pretty soon, the driving and management will have to be outsourced as well," he says. "When that happens, the outsourcing price advantage disappears leaving you with same or higher cost structure than in-house, with none of the advantages of in-house."

Such postulations are forward-looking, extreme even. But is it really too outrageous to believe that chief information officers - operating under increasing financial and skills pressures - will search offshore for talented IT managers?

This week's Computing - out tomorrow (13 December 2007) - features a full interview with Duncan Aitchison, where the partner at outsourcing advisory specialist TPI suggests talks at length about multisourcing and future destinations for offshoring.

In the piece, Aitchison says he expects any remaining hesitancy surrounding offshoring to subside because of an increasing requirement to source specialist workers.

The ability to tap into a broad skills pool at a financially attractive price means more UK firms will look overseas for external service provision:

“Cost is clearly significant. But do not underestimate the skills issue. We generally do not have enough skilled talent in the West any more.”

Demand for traditional, bulk IT skills is depressed locally. And Aitchison advises UK IT professionals to migrate towards process-oriented specialities, rather than heavy-lifting skills:

“These days you have to be able to drive and manage projects ­ and these are skills that firms are much less likely to outsource."

Full interview with Duncan Aitchison: IT directors must consider a range of outsourcing options

You read it here first - and it turns out Duncan Aitchison was right. A few weeks ago, the partner at outsourcing advisor told The Knowledge that India was still king of the offshoring destinations, but that a bunch of other destinations were biting hard on its heels.

Now analyst Gartner has released research that comes to similar conclusions, suggesting India remains the undisputed leader in offshore services - but that countries such as China, Russia and Brazil are providing increasingly credible alternatives.

Gartner predicts offshore spending will increase by 60 per cent in Europe, and 40 per cent in the US, next year. The analyst's top 30 locations for offshore services are:

• Americas - Argentina, Brazil, Canada, Chile, Costa Rica, Mexico and Uruguay
• Asia/Pacific - Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam
• Europe, the Middle East and Africa (EMEA) - the Czech Republic, Hungary, Ireland, Israel, Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine

Interesting stuff from Gartner. But some of Aitchison's more far-out predictions for offshoring growth - Ghana and Mauritius - fail to make the analyst's list.

One thing they do agree on, however is Aitchison's comment: "Everyone across the world is looking at offshoring."

Travelling as a business vegetarian can be a real pain in the rack-mounted server. A friend of mine travelled to Romania recently and the trip was apparently a big success, apart from the food.

My mate is vegetarian, you see. And his requests for non-meat-based meals were met with derision. "What no meat and just vegetables?" said the restaurateur, laughing like he had just encountered the craziest concept in the history of mankind. "Are you a real man? We will see to that - and give you lots of beef."

Poor chap. But when in Rome, of course, there is a small element of having to smile politely and accept the vagaries of Rome, so to speak.

My friend's solution was the refuge of many of a travelling vegetarian: "Thank the world economy for globalisation," he said. "McDonald's one night and an Indian restaurant the next."

As mentioned on this blog the other day, do not expect the trend for offshoring to slow - in fact expect the amount of countries involved in external service provision to increase.

I met Duncan Aitchison, partner at outsourcing advisor TPI, yesterday who told me that multisourcing - and offshoring in particular - remain the dominant sourcing fashions.

"I get calls from all over the world," he says. "Everyone across the world is looking at offshoring."

And from his recent dealings, Aitchison lists a collection of countries that have been been keen to join the offshoring bandwagon: Argentina, Uruguay, Philippines, Russia, Ghana, South Africa and Mauritius.

Despite such interest, he says India stills wins on every offshoring dimension – probably because of the high level of English skills.

So far this year, India-based service providers have won more than 24 per cent of all the deals on which TPI has advised, up from an average of 13 per cent during the previous four years.

Regular readers (hello Mum?) may remember my interest in the continuing technology development of the second largest country in Europe - Ukraine.

Back in the pre-Facebook days of December 2006, I wrote a piece about Ukraine being the next hot destination for outsourcing, with service provision turnover in the former Soviet republic growing at between 200 and 300 per cent annually.

Yesterday's research from TPI - discussed on this blog - pointed to the continuing desire from IT directors to search out tip-tip offshoring locations. And three factors seem to point towards Ukraine having an upper hand:

1. Ukraine is making major in-roads into the high-end scientific software niche
2. Being European, it's closer than China or India - which is always handy
3. Finally, the supporting technology infrastructure is expanding rapidly

New research suggests Ukraine is one of the fastest growing broadband markets in Europe with an annual growth rate of more than 180 per cent, according to analyst Point Topic.

The Ukrainian market is dominated by two major players - the incumbent and catchy-named Ukrtelecom, and cable operator Volia.

Volia offers none-too-shabby broadband speeds of up to 38 Mbps and is planning to set up an digital TV service in Kiev by the beginning of 2008.

While regional centres outside Kiev have a long way to catch up, Ukraine – birthplace of the Easter Egg and Chicken Kiev - is quickly establishing a solid infrastructural base.