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Surveys Say No Rush To Outsource

New reports from TEC International and Gartner say companies don't seem to be in a rush to send IT jobs overseas.
Despite the hoopla surrounding offshore outsourcing, sending IT jobs abroad doesn't seem to be the on the minds of CEOs of midsize U.S. companies and CIOs from global organizations of varying size, according to two separate surveys released Tuesday.

According to a quarterly survey of nearly 1,100 midmarket CEOs by TEC International, a CEO consulting firm, just 5% say they intend to outsource IT jobs overseas. By comparison, 12% plan to offshore manufacturing jobs, while 73% say they have no intention of doing any offshore outsourcing.

Gartner's survey of 956 CIOs, about half from North America, shows that nearly 80% of the business-technology executives queried don't see IT outsourcing or offshore outsourcing as a priority now or in four years. Gartner says that's surprising because the IT outsourcing market is seen growing at a 7.5% yearly clip over the next three years. "CIOs have so focused on security, privacy, and data protection that outsourcing has dropped off their radar," says Marcus Blosch, Gartner's executive program VP and research director. "Outsourcing is their blind spot."

Both surveys predict an improving economy. Seventy percent of the CEOs see the economy improving in the next 12 months. Asked a different but similar question, 81% of the CIOs see recovery in the IT sector by mid-2005.

Six of 10 CEOs surveyed from companies with yearly sales of $1 million to $1 billion expect their staffs to increase this year, with fewer than 6% reducing headcount. Most of the new jobs will be in sales and marketing, with 48% of respondents hiring in those areas. Also, 30% say they'll increase their professional staffs, which include IT workers and managers.

Slightly more than half of the CEOs expect fixed investment expenditures to increase this year; only 8% project a decrease.

The CIOs surveyed say their IT budgets increased 1.4% in 2004, a very modest figure--but still better than in 2003, when budgets were flat. IT budget increases peaked in 1999 during the dot-com craze, when they soared by nearly 16%, according to Gartner.

The slight uptick in IT budgets suggests an improving economy, Blosch says. "CIOs are still focused on controlling costs," he says. "They haven't yet shifted gears to manage growth, but there is an atmosphere of cautious optimism."

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