US research and advisory firm, Gartner Dataquest, surveyed 917 US-based companies with 1,000 employees or more and found that 42 major companies were using offshore IT resources.
Of the 42 companies, sixty-nine per cent said they expected their IT budgets to be 1.5 times of that in 2002, with a quarter of them planning to use the increase in cash to outsource more IT services abroad.
Rebecca Scholl, a Senior Analyst for Gartner Dataquest's IT services group, said: "There is a significant increase in the number of US businesses exploring the offshore sourcing model. We expect that over the next 12 months, the primary driver of growth for the offshore services market will occur from increased budgets of existing clients rather than new adopters."
According to Gartner, the top opportunities for growth in offshore services over the next year will include enterprise application integration (EAI) services, applications outsourcing, packaged application implementation and integration with legacy applications beyond applications development and maintenance services.
India remained the country of choice for US IT outsourcing with 29 of the 42 companies using services there.
Canada, Ireland, Singapore, Mexico and China were also sited as attractive countries to outsource IT services to.
What does it mean for the UK IT industry?
One of the fastest growing Indian IT outsourcing companies, both in the UK and US, is Wipro Techologies.
Speaking to Shout99.com in London, Sudip Nandy, Vice President of Wipro Technologies Europe, said: "The increase of US spending on outsourcing is mirrored in the UK and we believe this trend will continue.
"Europe too is catching on the wave of working with Indian offshore partners to deliver time to market and cost effectiveness within their IT departments.
"UK companies have been at the forefront of embracing the concept of offshore outsourcing and its benefits in Europe. They have successfully used this business model to gain efficiencies, save money, increase productivity and keep pace with rapidly changing technology.
"In the last few years, blue-chip companies to emerging start-ups have looked to India for outsourcing their software requirements, whether it is application development or IS maintenance. Emerging technology areas are also gaining in popularity, such as EAI, legacy system integration, E & WAP portal development."
Mr Nandy denied growth in the offshore IT outsourcing industry would make it harder for UK IT workers to find jobs.
He said: "There seems to be a mind shift in companies in Europe, whereby outsourcing is not being viewed as a threat, but complimentary to an organisation's internal IT departments. Offshore companies like Wipro are not here to take away IT jobs, but help bridge the gap of IT skills shortage in Europe, as well as work with our customers internal IT departments to help them gain competitive advantage, deliver new services, streamline their processes, cut costs, deliver projects on time and within budget.
"We want to be viewed as a IT services, solutions and consultancy partner of choice, to build trust and work in harmony with our customers. Wipro works with some very forward thinking and early adopters, who have the vision and foresight to embark on a relationship with us and see tangible benefits."
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Richard Powell, © Shout99.com 2002
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