As more companies move application-development work to third parties, IT organizations must ensure that their staffs are equipped with the skills to manage the contracted work effectively, while also providing staffers with career-development opportunities that help them evolve into new roles.

About 20% of overall application-development work is outsourced today, including offshore and domestic locations, says Stan Lepeak, VP at IT research and consulting firm Meta Group. That will increase by about 10% a year during the next several years, Lepeak estimates. "As more commoditized work such as coding and testing is moved offshore, local application developers are doing more complex work," including software design work, he says.

Everyone involved in outsourcing needs to know what's expected of them, Ascenzo says.

Companies often are uncertain about how the roles of their IT staffs will change when development and other software work is outsourced. For example, in-house IT personnel who were responsible for programming and software development might suddenly become liaisons between a company's business units and its outsourcers or contractors. That might require these programmers to develop skills to evolve into business analysts. Some workers may be able to learn on the job, while others might need formal training to make the transition. Still others might not have the background, skills, or even the desire to make the change.

Synygy Inc., a maker of workforce-optimization software, employs its own application-development and product-development staff in Romania and India. In the future, the technical role of the company's in-house or U.S.-based application developers will be minimized because those skills are easy to get overseas, Synygy CIO Chetan Shah says. As a result, Shah predicts that U.S. application-development workers will need to beef up their business expertise and learn to manage remote teams. That might require spending time with overseas development teams. Besides business analysts, other career possibilities for U.S. app-development staffers exist in the security arena, Shah says.

Communication and teamwork are key to managing outsourcing relationships successfully, says Carl Ascenzo, CIO at Blue Cross Blue Shield of Massachusetts, which outsources most of its business technology. The most important ingredient is making sure both sides are "operating in the spirit of the contract," Ascenzo says. That means all people involved need to know what's expected of them and what will happen if they're not meeting expectations.

"Projects come and go, products come and go, people come and go. But values win the test of time," Ascenzo says, and there has to be a clear understanding of those values. "We tell individuals that if there's an issue, I should be able to walk into the room and I shouldn't be able to tell who's employed by what company," he says.

Although the demand for U.S. programmers and application developers will likely decrease in the coming years, all IT professionals will need to have an understanding of programming. "At the end of the day, if you're managing people, you can't skip knowing what a developer or programmer does," Synygy's Shah says. "I'd never hire a person who never did programming."