Gartner Says One Out of 10 Jobs in U.S. IT Vendors and IT Service Providers to Move Offshore by End of 2004.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--July 29, 2003

As offshore outsourcing ramps up and the dislocation of IT jobs in the United States continues, CIOs must anticipate the potential loss of talent, knowledge and performance. By year-end 2004, one out of every 10 jobs within U.S.-based IT vendors and IT service providers will move to emerging markets, as will one of every 20 IT jobs within user enterprises, according to Gartner, Inc. (NYSE: IT & ITB).

"To many CIOs and business executives, the decision to outsource activities offshore is fiscally sound -- the cost, quality, value and process advantages are well-proven," said Diane Morello, vice president and research director at Gartner. "At a time when IS organizations are struggling with poor credibility and IT is being scrutinized, offshore outsourcing is becoming a tool for improving service delivery and a source of highly qualified talent in greater numbers."

However, Gartner analysts said that CIOs and other business executives must not trivialize the impact of offshore outsourcing on their business strategies, their organization or their employees. Three areas of concern are loss of future talent, loss of intellectual assets and loss of organizational performance.

During the offshore transition, the degree of uncertainty is so high that it can severely disrupt organizational performance. CIOs and other business executives should hold themselves accountable for sustaining and improving organizational performance levels during the transition.

Gartner recommends CIOs and other business executives coordinate along several lines:

-- Identify competencies, roles, people and knowledge that will

be retained -- To prevent organizational paralysis, CIOs must

define the future role and shape of their IS organizations as

certain day-to-day activities move overseas. Many enterprises

retain critical functions such as application design,

application integration, client-facing process management,

enterprise architecture, information management and

high-investment competency centers. In addition, they develop

new competencies in service management, vendor relationship

management, process management and business integration.

-- Create a meaningful transition plan -- Provide clear timelines

and milestones to help people prepare for the change that

offshore outsourcing brings. At each milestone, certain

segments of work or applications will complete their offshore

transfer, and the affected people will be terminated or

redeployed. Companies that have a lasting commitment to their

people will generally spend time arranging redeployment of

their affected employees.

-- Outline employees' options -- Define the options available for

affected employees: reskilling, redeployment, termination or

outplacement. Executives must hold themselves accountable for

communicating clearly, quickly and meaningfully.

"CIOs need to communicate clearly, honestly and respectfully about the transition plan, and about the options available to affected employees," Morello said. "The way in which enterprises deal with employees during the offshore transition will be lasting testament to the perception of leadership and the reputation of the company as an employer."

Additional information is available in the Gartner research note "U.S. Offshore Outsourcing: Structural Changes, Big Impact." This analysis examines how CIOs must react as the dislocation of IT jobs in the United States becomes real. It can be purchased on Gartner's Web site at www.gartner.com/DisplayDocument?id=400270&ref=g_alert.

Another resource for information on how offshore outsourcing is affecting jobs is people3, a Gartner, Inc. company. people3, the world's leading authority on IT human capital, provides "people solutions" for IT organizations. Supported by seasoned human resources and IT consultants who understand the unique languages and issues of both the HR and IT communities, people3 helps its clients maximize the value of their most important investment, their people. people3, a Gartner company, is headquartered in Bridgewater, N.J. For more information on people3, please call 888-PEOPLE3 or visit the Web site at www.people3.com.

To keep up to date on the latest outsourcing issues, please visit Gartner's Outsourcing Web site at www.gartner.com/outsourcing. This Web site offers content, tools, products and services that are needed to make effective, strategic decisions around outsourcing. When browsing the site, users receive a breakdown of key outsourcing issues, industry trends and best practices for making smarter business decisions. This area also includes relevant research and links to Consulting and Measurement services. Custom Alerts are also available, enabling users to stay current on new research focused on their outsourcing agendas. Free copies of the Gartner outsourcing handbook, Outsourcing: The Real Deal, can also be ordered on the Outsourcing Web site.

About Gartner

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner's businesses are Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Revenue for calendar year 2002 totaled $888 million. For more information, visit www.gartner.com.