Meta Group predicts boom in development outsourcing

According to Meta Group, 41% of new programming work is farmed out to third party development providers, as companies aim to reduce operating costs.

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By  Greg Wilson Published  November 15, 2003

More companies are waking up to the strategic and financial advantages of outsourcing development activities. According to analyst house, Meta Group, 41% of new programming work is farmed out to third party development providers.Last year, 35.9% of coding working was distributed to outsourcing providers and external contractors.“IT budget cutbacks have left IT managers little choice but to outsource if they are to get their development projects completed,” says Meta Group executive vice president Dr Howard Rubin. “IT organisations often use external resources — such as consultants, contractors, packaged solutions, and outsourcing providers — to augment and sometimes replace internal resources. Going offshore and using the economics of offshore outsourcing have been the only competitive options left for larger companies since all the IT budget decreases of 2000, 2001, 2002, and even 2003,” he explains.The growing maturity of offshore development companies is accelerating the outsourcing trend among European, US and Middle Eastern organisations. Offshore outsourcing is definitely up as offshore companies mature, providing cost-effective and high-quality services. These companies have found methods for mitigating risk and have compiled a substantial list of strong customer testimonials. Although India continues to be the preferred ‘development destination,’ with more than 500,000 knowledge workers, other countries are emerging into serious development hubs. According to Meta Group Russia, the Philippines, Ireland, and China are the up-and-comers to watch.

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