Offshore buyer's guide

I'm prepared for the backlash from daring to run a special report on offshore outsourcing. The O-word always triggers a stream of email invective from displaced IT workers. Of course, I'm sympathetic to the plight of IT workers in the US who get laid off, or worse, have to train their foreign replacements and then get laid off. (And, no, I wouldn't like to be replaced by an editor in India who might work at half the cost.) I'm also aware of the security risks of having mission-critical code written by people whose loyalties are unknown.

But the cold, often cruel fact is that offshore outsourcing is an "irreversible megatrend," as a Gartner analyst put it.

CEOs and chief financial officers are demanding it. CIOs are even demanding that their U.S.-based service providers get at least some of the work done offshore to save money.

It's much like the loss of US textile jobs to overseas manufacturers. For years, our shirts, TVs and PCs have been manufactured elsewhere. Now globalization has come to the corporate IT department, too, whether we like it or not.

Welcome to the world of offshore software manufacturing. India is the clear leader by a large margin, but other countries are nipping at its heels, promising lower costs or special advantages. So we've produced a guide to the strengths, weaknesses and risks in 11 countries on the CIO's horizon. Better to know what you're getting into, n'est-ce pas?

One trend to watch is "daisy-chaining," in which US vendors farm out work to a firm in India, which then subcontracts parts of the job to even cheaper locations. (Headline of the future: "India's Programmers Protest Outsourcing.")

Eventually, it seems, CIOs will just negotiate a good contract with an outsourcing vendor and let them worry about where the work gets done.

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