META Report: Offshore Outsourcing Fueled By IT Budget Pressures

User Action: Global 2000 organizations should rigorously evaluate offshore outsourcing possibilities for IT and related services and projects for possible inclusion in their overall portfolio of sourcing options. The potential rewards of an outsourcing engagement should be weighed against the possibility that those rewards will not be realized, and in light of the costs that will be incurred as well as the risks contingent on variable political and economic conditions that may affect offshore outsourcing providers.

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Organizations must thoroughly evaluate the capabilities of any firm proposing an offshore delivery model. Capabilities vary widely among different offshore vendors (as do the offshore practices of US-based outsourcing firms). Also, it should not be assumed that offshore providers will always propose lower pricing than traditional outsourcing firms. Competitive bidding should include a mix of offshore providers, domestic providers with offshore delivery capabilities, and providers proposing domestic delivery.

META Group analysts Dean Davison, Michele Hudnall, David Scott Lewis, David Cearley, Steve Witkowski, John Brand, Stratos Sarissamlis, Chuck Johnston, Ashim Pal, Jeffrey Mann, and Chris Byrnes contributed to this article.