GLOBALIZATION: SOMETHING HAPPENING HERE
There's something intriguing happening in globalization of IT. In contrast to the growth of recent years, this year there's no big leap in the number of U.S. companies offshoring technology and business functions. Two-thirds of companies are doing offshore IT outsourcing, the same as last year. In 2004, less than half were. Forty percent are doing offshore business process outsourcing, also the same as last year, after shooting up from 17% in 2004. Same story for the use of H-1B visas to bring in foreign labor: at 58%, nearly identical to last year, after rising from 43% in 2004.

Of course, the total amount of work being done by offshore vendors appears to be still rising (Indian IT outsourcers keep growing, even if it's more slowly than in recent years). It's likely that U.S. companies that have built ties with their outsourcers are sending more work to them, but that we won't see another major wave of new companies embracing it.

Yet global IT remains hot in one area: building in-house IT shops in Asia. Last year, just 24% of InformationWeek 500 companies said they were expanding IT operations in China, India, or elsewhere in Asia. This year, 37% say they're doing so. Our sense is that companies aren't returning to the "captive" strategy so popular earlier in the decade, where companies hired their own cheap coders to support headquarters rather than pay Infosys or Satyam or TCS or Wipro to do so. In fact, the number of companies insourcing--bringing outsourced work back--is on par with last year, with 18% of companies doing so.

No, this is likely a case where Asian markets increasingly are the source of sales, manufacturing, and product development, so companies need bigger IT teams there to support those operations. In that sense it's parallel to outsourcing efforts, not a direct replacement.

This moves tracks at the industry level as well, supporting the notion that these Asia-based IT expansions are focused where the sales and production growth is. U.S. industries in which more than half the companies are expanding there include electronics, IT, chemicals, manufacturing, consumer goods, and automotive--all businesses heavily export oriented, and often with global production. Those with less than 15% of companies doing so include insurance, energy and utilities, health care, retail, and metal and natural resources.

BREAKTHROUGH AHEAD?
Which technologies are likely to boom this year? One measure is whether newer technologies are in limited deployment at around half of companies. That could mean they're in the pilot stage and about to break into mass deployment--or that they're doomed to fizzle out or never get beyond a small niche used at companies with very specific needs.

With these numbers, a note of caution is in order. These are self-reported, and the companies self-select whether to take part in the InformationWeek 500 survey. Particularly with the hottest emerging tech, beware of taking these as hard market-share numbers. Bluntly put, a few strike us as high when it comes to wide deployment, which we define as deployed to half of employees or, in the case of IT-centric tools, half of the IT staff. However, the data has a very strong track record for spotting emerging tech trends over the years, so it's revealing to watch the biggest movers.

By this measure, desktop virtualization is one to watch. The survey finds limited deployment by 54% of InformationWeek 500 companies and wide deployment at 25%. (Though that 25% is one of those that looks too high; it's likely that many of those companies, even those well down the desktop virtualization path, are short of our "wide deployment" definition of half of employees.) But with half of these companies testing desktop virtualization, there's the potential for a wave of employees to be moved to this approach in a short time. It's not likely to happen as quickly as server virtualization, since just the training of a large employee community soaks up a lot of time and resources, but companies are starting to stake out big goals for desktop virtualization.

Unified communications is in this camp, with 48% of companies with limited deployment and 31% with wide deployment. As mentioned above, Web 2.0 development tools are a solid contender, with limited deployment in almost two-thirds of companies' IT departments.

Tougher to call is mapping/global positioning system technologies. Forty-five percent of InformationWeek 500 companies have them in limited deployment, up from 33% a year ago. Location seems poised to become a more important business tool, based on more customers and employees carrying GPS-enabled cell phones. There's growing startup energy around location-based services, and Yahoo's new Fire Eagle service, a kind of hub for letting people share their location data with companies, offers a sign of what's to come. But privacy concerns--and fear of location-based spam--could keep this technology from breaking through in the coming year.

Tracking IT's Share
	2001	2002	2003	2004	2005	2006	2007	2008
Average company revenue	$12,471	$9,427	$9,652	$9,087	$9,776	$9,469	$12,031	$11,025
Average IT dollars spent	$484	$320	$353	$334	$293	$304	$435	$354
Average IT budget as % of revenue	3.88%	3.39%	3.66%	3.68%	3.00%	3.21%	2.76%	2.80%
Note: Spending in millions. Data: 2008 InformationWeek Analytics survey of InformationWeek 500 executives, 2001-2008