Offshore outsourcing to reach $17bn by 2008

Global investment in offshore IT services will grow from nearly $7bn in 2003 to $17bn by 2008, new research has predicted.

According to a study by IDC, spending by US customers on offshore IT services will continue to concentrate heavily on applications, with most activity in the areas of custom application development, application management and systems integration.

The analyst firm predicts that the countries poised to win from this growth in outsourcing will be India, the Philippines and China, joined by central and eastern Europe.

"Customers' continued need to look to offshore as a resource from which to procure IT services as part of their overall sourcing requirements is not only growing as a share of the total IT services market, but is expanding from traditional IT services, such as application development and maintenance, to areas traditionally limited to being delivered locally," said David Tapper, director of outsourcing, utility and offshore services research at IDC.

"These services range from application and infrastructure management to IT consulting."

Barry Mason, senior analyst for IDC's application outsourcing and offshore services research, added: "Due to the persistent need for customers to reduce costs, coupled with the proven capabilities of offshore players, IDC [sees] considerable market opportunities for these players in the onshore markets, as well as local players looking to leverage offshore as part of their service delivery capabilities."

This trend is also evolving into a means for offshore players from a variety of regions to build market presence in the major onshore IT and business services markets, such as the US and western Europe, IDC said.