Letters to the Editor: Some Positive Trends In Outsourcing Market
In your Nov. 16 Technology Journal article "Outsourcing Firms Shift Gears in Tight Market," the outsourcing development may be quite positive for the industry. As you point out, the U.S. outsourcing market is changing and 1999 revenues that were inflated by Y2K and ERP spending are unlikely to reappear anytime soon. Nevertheless, there are many positive trends, including global expansion of outsourcing to offset slower growth in a more mature U.S. market, greater spending on infrastructure, applications management and network services to facilitate the transition to e-business, and an aging federal information technology staff that will accelerate federal sector outsourcing, especially to enable e-government.</br></br>If the so-called outsourcing dinosaurs have been outflanked by their smaller, newer competitors, the tide may well be reversing in favor of size, broad experience and financial staying power as the scramble for qualified IT staff intensifies. At a time when corporate IT departments and governmental agencies alike are confronting a work force nearing retirement, new IT graduates favor established outsourcers and shun the civil service. This will only intensify the trend toward outsourcing.</br></br>If so, stock investors would be well advised to adopt a longer-term investment horizon. Announcements of layoffs should be understood as normal repositionings by outsourcers that acquire new staff with each contract win. They don't necessarily presage revenue shortfalls, and the growth of revenues from non-U.S. market doesn't signal a souring of the U.S. market.</br></br>Albert Nekimken</br></br>Vice President