GE Expects To Send More Work Offshore

GE expects to surpass former CEO Jack Welch's goal of putting 70% of outsourced work in low-cost countries.

Paul McDougall, Editor At Large, InformationWeek

May 17, 2004

2 Min Read

A General Electric executive said Monday he expects the company to increase the number of IT jobs it sends offshore over the next several years.

Under former CEO Jack Welch, GE aimed to outsource about 70% of its IT functions, placing 70% of the outsourced work in low-cost, offshore locations. However, at a Gartner outsourcing conference, Steve Morrison, GE's director for Global Delivery Centers. said he believes the company will increase the percentage of IT work it sends offshore. "I believe we can get 80% to 85%" of GE's outsourced IT work offshore, Morrison said.

Much of the additional work that GE moves offshore would likely be placed in China, Morrison added. From the standpoint of cost, he said, "China is looking good" compared with India—where most of GE's offshore work is currently performed. Morrison said that Chinese services companies lack the scale and sophistication to handle many requirements of large, multinational corporations. However, he noted that many of the Indian companies GE contracts with are establishing operations in China. That could let GE reap the cost savings available in China while still working with established service providers.

Morrison's comments came the same day that Forrester Research issued an updated report saying the offshore trend is gaining steam. The study indicated that 40% more U.S. services jobs will move offshore by the end of next year than the firm originally predicted. Forrester now says that 830,000 services jobs will move to low-wage countries such as India, China, and Mexico by the end of 2005, with that passing 1 million in 2006. The firm initially estimated the 2005 number to be 588,000 in a study released last year that sparked much of the current political debate around offshore outsourcing.

By 2015, 3.4 million U.S. services jobs will have moved offshore, according to Forrester. The research firm's analysts say offshoring is being driven by continued pressure on IT and business executives to cut costs.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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