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Carlos de backer the impact of offshoring on it skills - ict symposium 2010

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  • 1. The Impact of Offshoring on IT Skills in Belgium
    Prof. dr. Carlos De Backer
  • 2. Offshoring Opinions
    UK skills gap fuels offshoring
    Outsource Magazine August 2010
    Offshoring and Unemployment
    IZA Discussion Paper 2805 – May 2007
    Het einde van offshoring is nabij
    Computable maart 2010
    Offshoring is bad for IT skills
    CIO Jury July 2009
    Shortage of IT skills - India Must Consider Offshore Outsourcing
    Gartner – Linda Cohen
    Outsourcing maakt ICT-organisatie innovatiever
    Computable oktober 2010
  • 3. Outsourcing - Insourcing
  • 4. Business Process Outsourcing (BPO)
    BPO: Outsourcing of back office operations (e.g. Legal (LPO), Human resources (HRO)...)
  • 5. Information Technology Outsourcing ITO)
    ITO: Outsourcing of Information Technology
  • 6. Offshoring
    Offshoring: The shifting of service work to a distant nation
  • 7. Nearshoring
    Nearshoring: shifting of service work to a neighboring country
  • 8. Captive Center
    Captive center: companies set up their own, wholly-owned facility for software development, IT support, back-office data processing…
  • 9. Selection Criteria by CIOs
    Source: PWC - Offshoring in the Financial services industry: Risks and Rewards
  • 10. A.T. Kearney: Ranking of Offshoring Countries
    Financial attractiveness
    Quality of education and availability of skilled workers
    Political and economic stability
  • 11. IT Offshoring Countries
    India (6.9)
    China (6.6)
    Malaysia (6.1)
    Thailand (6)
    Brazil (5.9)
    Indonesia (5.9)
    Chile (5.8)
    Philippines (5.8)
    Bulgaria (5.8)
    Mexico (5.7)
    (Source: A.T. Kearney)
  • 12. Nearshoring Countries for Western Europe
    Bulgaria (5.8)
    Czech (5.6)
    Egypt (5.6)
    Estonia (5.6)
    Poland (5.6)
    Hungary (5.5)
    Romania (5.3)
    Russia (5.2)
    Israel (5.2)
    Ukraine (4.9)
    A.T. Kearney
  • 13. CIOs: Why offshoring?
    Globalization trend: Footprint in new economy
    Lack of skilled IT staff
    Focus on Core Business
    Reduce costs
    Access to innovations
  • 14. Salary Cost
    India (annual salaries)
    Developer: 320.000 Rs (€5.200)
    Senior developer: 520.000 Rs (€8.500)
    Project manager: 1.000.000 Rs (€16.375)
    Source: PayScale
    Belgium (monthly salaries)
    Developer: €3.250
    Senior developer: €4.000
    Project manager: €4.500
    Source: DataNews
  • 15. Hidden Offshoring Costs
    Vendor selection process
    Contract negotiation and management
    Setting up the HW/SW environment
    Communication costs
    Cultural differences
    Costs for skilled project managers
    Legal issues
    Layoffs and retention of key people
  • 16. CIOs: Offshoring Risks
    Home Consultant: So, today is the checkpoint for the designs, status should be on 90% completed, meaning everything’s done and waiting for final review. Are you finished?Offshore Consultant: Yes, I put the status on 90% completedHome Consultant: Ok, let’s have a quick look at the document. Well… the document is basically empty? How can you put it on 90% completed?Offshore Consultant: Yes, document is empty – but it’s all in my head!
    Source: PWC - Offshoring in the Financial services industry: Risks and Rewards
  • 17. Offshoring Skills and Services
    Call Centers:
    technical support
  • 18. Offshoring Skills and Services
    Software development:
    Conversion projects
    Website development
    Application development
    Report building
    Software maintenance
  • 19. Be Realistic!
    Long term relationship
    Large projects
  • 20. This is Belgium!
  • 21. Offshoring Market
    Micro and small enterprises will use services provided by the home ICT market.
    (Only) large enterprises will have access to resources offered by offshoring companies
  • 22. What Large Enterprises Need
    High level multicultural project leaders with great analytical...
    ... and communication skills
  • 23. Unemployment?
  • 24. Unemployment?
    The estimations of labour demand equations for 58 manufacturing industries and 35 service industries fail to reveal a substantial impact of the offshoring intensities on total employment in these industries.
    Federal Planning Bureau – January 2009 page 28
  • 25. The World is Flat
  • 26. End Quote
    Outsourcing should not be about cutting out pennies, it should be about growing your business.