Date:27/08/2004 URL: http://www.thehindubusinessline.com/2004/08/27/stories/2004082701490700.htm

Back `More US manufacturers use offshore IT resources'

Moumita Bakshi

New Delhi , Aug. 26

US manufacturers have fully embraced offshore IT outsourcing, with as many as 23 per cent of industrial companies actively using offshore IT resources from locations such as India, China and Russia, according to a Forrester report.

A Forrester report titled `2004: US manufacturers fully embrace offshoring' said, the onshore IT providers such as IBM and EDS seem poised to lose manufacturing IT deals to their offshore rivals, it said.

Forrester, which conducted a poll with 222 IT decision-makers in North American manufacturing firms, found that 38 per cent of manufacturers planned to sign new IT outsourcing contracts between July and December 2004 which is three per cent more than non-manufacturing companies.

"Among all industries, except for the financial services industry, the US manufacturing sector is the most active user of offshore outsourcing.

As many as 23 per cent of industrial companies report that they actively use offshore IT resources from places such as India, China and Russia, while 18 per cent of manufacturers are considering using or are piloting offshore IT initiatives," it said.

Among manufacturers that rely on offshore IT suppliers, 55 per cent avoid hiring more IT staff - the highest number among all industries. "While 44 per cent of manufacturers attempt to redeploy existing IT staff, 38 per cent of them are simultaneously reducing the number of full-time employees - and a whopping 59 per cent are cutting back the use of contractors," the report said.

One major implication of sending IT work offshore is that onshore providers become less attractive for US manufacturers, the report noted.